--- title: What is a Solution Oriented Fund? canonical_url: https://sanchaykaro.com/what-is-a-solution-oriented-fund/ last_updated: 2026-04-23T06:56:09+00:00 plugin_version: 1.2.1 --- # What is a Solution Oriented Fund? Are you saving for your **retirement**? Do you want to build a **corpus** for your **child's education** or marriage? A **Solution Oriented Fund** could be the perfect choice for you. This blog explains **what is a Solution Oriented Fund** in very simple language. You will also learn how to invest easily using the **Sanchaay Karo app**. --- ### What is a Solution Oriented Fund? (Very Simple Definition) A **Solution Oriented Fund** is a special type of **mutual fund** designed to help you achieve a **specific life goal**. According to **SEBI**, **Solution Oriented Schemes** include two main types: **Retirement Funds** and **Children’s Funds**. Think of it like this: A regular **mutual fund** helps you [grow your money](https://sanchaykaro.com/%f0%9f%92%b0-no-work-monthly-income-swp-the-8-4-3-rule-your-2025-wealth-blueprint/) generally. A **Solution Oriented Fund** is like a dedicated savings box for one big dream. You put money in, and you do not touch it until your goal is reached. **Key Highlights:** - **Goal-Based Investing:** Designed specifically for **retirement planning** or a **child's future** (education, wedding, etc.). - **Mandatory Lock-In Period:** **SEBI** requires a lock-in of **5 years** or till the goal is reached, whichever is earlier. - **Open-Ended:** You can buy and sell units after the **lock-in period**. **Retirement Funds** aim to build a **secure corpus** for your life after work. **Children’s Funds** help parents accumulate wealth for long-term needs like higher education abroad. --- ### How Does a Solution Oriented Fund Work? (Step-by-Step) **Solution Oriented Funds** follow a **"Glide Path"** strategy. The **fund manager** automatically adjusts your **asset allocation** as your goal gets closer. Here is a simple step-by-step breakdown: **Step 1: Determine Your Goal and Time Horizon** The **fund** is created for a specific purpose (e.g., retirement at age 60) and invests for a long duration (20–30 years). **Step 2: Aggressive Phase (High Equity)** In the beginning, the **fund manager** invests a high percentage (70–80%) in **equity** to maximize **growth**. **Step 3: Transition Phase (Moving to Debt)** As your **retirement** or the child's age of maturity approaches, the **fund manager** gradually shifts money from **equity** to **debt**. **Step 4: Conservative Phase (Capital Protection)** When the goal is near (5–10 years away), the **fund** moves most of the money into **debt** to protect the accumulated **corpus**. --- ### Key Features of Solution Oriented Funds FeatureWhat It Means**[Goal-Based Investing](https://sanchaykaro.com/goal-based-investing-in-mutual-funds/)**Tailored for **retirement** or **child's education****Lock-in Period**Mandatory **5 years** or till the goal is met (e.g., child turns 18)**Dynamic Asset Allocation**Shifts from **equity** (growth) to **debt** (safety) over time**Open-Ended**Can redeem after **lock-in****Professional Management****Fund managers** handle rebalancing based on your **life stage****Multiple Plan Options**Offers **Aggressive**, **Moderate**, or **Conservative** plans**SIP Facility**Available to start a **Systematic Investment Plan** with small amounts--- ### Types of Solution Oriented Funds #### 1. Retirement Funds These **funds** are aimed at building a **retirement corpus**. They often offer different plans: - **Equity Plan:** For young investors with a **high risk appetite**. - **Hybrid Plan:** Balanced mix of **equity** and **debt** for moderate **risk**. - **Debt Plan:** Higher **debt** exposure for those nearing **retirement**. #### 2. Children's Funds (Gift Funds) These **funds** help parents save for a **child’s [education](https://sanchaykaro.com/sip-for-child-education-2/)**, marriage, or other expenses. They also have a **lock-in** of **5 years** or until the child turns 18. Some **AMCs** allow grandparents to invest as a **gift**. --- ### Benefits of Investing in Solution Oriented Funds [Here are the main benefits of adding a Solution Oriented](https://sanchaykaro.com/building-your-mutual-fund-portfolio-a-step-by-step-blueprint-for-indian-investors/) **Fund** to your **portfolio**: BenefitWhy It Matters**Disciplined Goal-Based Saving**The **lock-in** prevents premature withdrawals, forcing you to stay committed to your goal**Professional Asset Allocation****Fund managers** adjust the mix of **equity** and **debt** as you age, removing emotional bias**Convenience (Plug-and-Play)**No need to research multiple **funds**. One **fund** does everything for you**[Power of Compounding](https://sanchaykaro.com/power-of-compounding-how-%e2%82%b91000-month-becomes-%e2%82%b91-crore/)**Long-term **compounding** helps build a large **corpus** over decades**Strong Return Potential****Equity-oriented [Retirement](https://sanchaykaro.com/nps-can-create-a-massive-retirement-fund/) Funds** have delivered **15–30% returns** in some periods**Tax Benefit (80C)**Investments in certain **Retirement Funds** qualify for deduction under **Section 80C****Gift Option**Relatives can invest in a **child's name** through **Children’s Funds**--- ### Top Solution Oriented Funds in India (2026) Here are the **best performing** **Retirement** and **Children’s Funds** based on recent data: #### Top Retirement Funds (Equity Oriented) Fund NameAUM (₹ Cr)5-Year Return (%)**ICICI Pru [Retirement Fund - Pure Equity Plan](https://sanchaykaro.com/retirement-planning-calculator/)**~1,609**30.32%****HDFC Retirement Savings Fund - Equity Plan**~6,236**27.46%****Nippon India Retirement [Fund - Wealth Creation](https://sanchaykaro.com/%f0%9f%92%b8-sip-vs-lump-sum-which-is-right-for-you/)**~2,605**23.01%**#### Top Children's Funds (Equity Oriented) Fund NameAUM (₹ Cr)5-Year Return (%)**SBI Children's [Fund - Investment Plan](https://sanchaykaro.com/%f0%9f%92%a5-want-to-10x-your-wealth-start-sip-in-midcap-funds-today/)**~5,158**26.39%****ICICI Pru Children's Fund - Gift Plan**~1,404**14.67%****UTI Children's Equity Fund**—**21.34%***Disclaimer: Past performance does not guarantee future returns. Please consult your **financial advisor** before investing.* --- ### Important: SEBI Has Replaced Solution Oriented Funds (2026 Update) On **26 February 2026**, **SEBI** issued a major circular discontinuing the **Solution Oriented Schemes** category. This was done to ensure "**true-to-label**" positioning and curb exaggerated return claims. #### Key Changes: 1. **No Fresh Subscriptions:** Existing **funds** cannot accept new money. 2. **Mergers:** These **schemes** will be merged with existing **schemes** having similar **asset allocation**. 3. **Introduction of Life Cycle Funds:** **SEBI** replaced them with **Life Cycle Funds** which follow a mandatory **glide path**. If you are already [invested in an existing **Solution Oriented Fund**](https://sanchaykaro.com/mutual-fund-investment/), your money is safe. It will be moved to a new **fund** without triggering **tax** immediately. --- ### Risks of Solution Oriented Funds (Must Read) **Solution Oriented Funds** are powerful, but they come with **risks**: RiskExplanation**Lock-in Inflexibility**You cannot withdraw for **5 years**, even in an emergency**Market Risk****Equity** exposure can lead to **volatility** and losses in a market downturn**Underperformance**Many **Solution Oriented Funds** have underperformed simple **Flexi Cap Funds****Fund Manager Risk**Returns depend on the **fund manager's** ability to execute the **glide path** correctly**Higher Expense Ratios**Some **funds** have higher fees, which can eat into long-term **returns**--- [[SIP for retirement](https://sanchaykaro.com/sip-for-retirement/)](https://sanchaykaro.com/sip-for-retirement/)### Taxation on Solution Oriented Funds (Simple Rules for FY 2026-27) The **taxation** depends on the **fund's** underlying **asset allocation** (equity [vs.](https://sanchaykaro.com/gold-mutual-fund-vs-gold-which-one-wins/) debt): #### Equity-Oriented (65%+ in equity) TypeHolding PeriodTax Rate**STCG**Less than 12 months**20%****LTCG**12 months or more**12.5%** (gains above ₹1.25 lakh)#### Debt-Oriented (65%+ in debt) Purchase DateHolding PeriodTax Treatment**On/After 1 April 2023**AnyGains added to **income** and taxed at **slab rate****Before 1 April 2023**3 years or more**20% after indexation****Tax Benefit:** Investment in **Retirement Funds** may qualify for **deduction** under **Section 80C** up to ₹1.5 lakh (only under **old tax regime**). --- ### How to Invest in Solution Oriented Funds Using Sanchaay Karo App Now that you understand what a **Solution Oriented Fund** is, the next step is **investing**. The easiest way is through the **Sanchaay Karo app**. **Sanchaay Karo** is a simple, trusted, and **SEBI-registered** mutual [fund investment](https://sanchaykaro.com/announcing-the-launch-of-the-bank-of-india-banking-financial-services-fund-nfo/) platform. It helps you [invest](https://sanchaykaro.com/invest-smart-in-2025-best-sip-mutual-funds-for-maximum-returns/) in **top funds** with just a few taps. #### Why Choose Sanchaay Karo App for Goal-Based Investing? - **[Smart Goal-Based Investing](https://sanchaykaro.com/smallcap-midcap-index-funds-in-passive-investing-smart-move-or-overkill/)**: Tell the app your goal (**retirement**, **child's education**). It suggests the right **plan** based on your **risk [profile](https://sanchaykaro.com/creating-your-risk-profile/)**. - **Simple Dashboard**: See all your investments in one place – no confusion or clutter. Track **NAV**, **returns**, and **portfolio** in real time. - **Quick KYC**: Complete your **KYC online** using Aadhaar and PAN in just 5 minutes. **Paperless KYC** is fully supported. - **[Start SIP](https://sanchaykaro.com/start-sip/) from ₹500**: You don't need a lot of money. Start small with a **Systematic Investment Plan (SIP)** . You can do **monthly [SIP](https://sanchaykaro.com/%e2%82%b92000-monthly-sip-can-you-reach-%e2%82%b910-lakhs/)**, **weekly SIP**, or **daily SIP**. - **Track Performance**: Get regular updates on how your **fund** is performing against its **benchmark**. - **No Hidden Charges**: Transparent and low-cost. You can choose between **regular plan** and **direct plan** options. - **Stay On Track**: Get timely reminders so your **SIPs** never stop. #### Steps to Invest (Very Easy) 1. **Download** the **Sanchaay** [Karo app from Google Play Store or Apple App](https://sanchaykaro.com/your-dream-goals-simplified-plan-save-and-grow-with-sanchay-karo/) Store. 2. **Sign up** using your mobile number and email. 3. **Complete KYC** – upload **PAN card** and Aadhaar (fully paperless). 4. **Search** for "Retirement Fund" or "Children's Fund" based on your goal. 5. **Compare** different **funds** based on **returns**, **expense [ratio](https://sanchaykaro.com/how-to-choose-the-right-mutual-fund/)**, and **fund manager** track record. 6. **Choose** between **lumpsum** or **monthly SIP** investment. 7. **Pay** using **UPI**, net banking, or debit card. 8. **Done!** Your investment starts growing. You will receive regular statements. 👉 **\[Click Here to Download Sanchaay Karo App Now\]** () --- ### Important Tips Before Investing Before you invest in a **Solution Oriented Fund**, keep these points in mind: 1. **Check Your [Tax](https://sanchaykaro.com/turn-your-tax-savings-into-wealth-with-elss/) Regime:** **Section 80C** deduction is only available under the **old tax regime**. 2. **Understand the Lock-in:** You cannot touch this money for **5 years**. Ensure you have other **liquid funds** for [emergencies](https://sanchaykaro.com/sip-for-emergency-fund/). 3. **Start Early:** The earlier you start (e.g., in your 20s), the more you benefit from **compounding**. 4. **Don't Just Rely on One Fund:** **Diversify** with **PPF**, **EPF**, or **NPS** to add safety. 5. **Check Expense Ratios:** Higher fees can eat into your **returns** over the long term. 6. **[Stay Invested](https://sanchaykaro.com/staying-invested-the-psychology-and-discipline-of-long-term-wealth-creation/) Beyond Lock-in:** Even after the **lock-in**, stay invested if your goal is still far away. --- ### Frequently Asked Questions (FAQs) **Q1: What is a Solution Oriented Fund?** A: It is a **mutual fund** designed to help you achieve specific life goals like **retirement** or funding a **child's education**. **Q2: Are Solution Oriented Funds safe?** A: They carry **market risk** like all **equity funds**. However, the automatic shift to **debt** as you approach the goal helps protect your **corpus**. **Q3: What is the lock-in period?** A: The **lock-in** is mandatory for **5 years** or until the specific goal is met (e.g., child turns 18). **Q4: What is the minimum SIP amount?** A: Most **funds** allow **SIP** starting from **₹500** per month. Through the **Sanchaay Karo app**, you can start with as little as **₹500**. **Q5: How are Solution Oriented Funds taxed?** A: **Taxation** depends on the underlying **asset allocation**. **Equity-oriented** funds have **LTCG** tax of **12.5%** above ₹1.25 lakh after 1 year. **Q6: Are they better than [regular mutual funds?](https://sanchaykaro.com/%f0%9f%92%bc-bank-of-india-large-cap-fund-regular-plan-growth-a-reliable-path-to-long-term-wealth-creation/)** A: They offer **discipline** and **automatic rebalancing**. However, some regular **Flexi Cap Funds** have historically outperformed them. **Q7: Can NRIs invest?** A: Yes, **NRIs** can invest through **Sanchaay Karo app** using their NRE/NRO account. **Q8: What happened to these funds in 2026?** A: **SEBI** discontinued the category on **26 February 2026** and replaced it with **Life Cycle Funds**. Existing investments are being merged into other **schemes**. --- ### Final Words – Should You Invest? **Yes**, if you: - Want a **hassle-free**, **goal-based** investment plan. - Lack the time to manage **asset allocation** yourself. - Are a **beginner** looking for a disciplined way to save for **retirement** or **your child**. - Are investing for the **long term** (10+ years). **No**, if you: - Need **flexibility** to access your money before **5 years**. - Have a **low risk tolerance**. - Prefer to build a custom **portfolio** using **Index Funds** or **Flexi [Cap Funds](https://sanchaykaro.com/the-modern-portfolio-4c-advantage-a-balanced-approach-to-equity-investing/)**. **Solution Oriented Funds** offer a simple, hands-off way to secure your biggest life goals. Start your **investment journey** today with the **Sanchaay Karo app**. 👉 **\[Click Here to Download Sanchaay Karo App Now\]** () --- **Disclaimer:** This blog is for **educational purposes** only. **Mutual fund investments** are subject to **market risks**. Please read all **scheme related documents** carefully, including the **Scheme Information Document (SID)** and **Statement of Additional Information (SAI)** , and consult your **financial advisor** before investing. **Past performance** does not guarantee **future returns**. **Tax benefits** are available only under the **old tax regime** as per current laws. Tax laws are subject to change. The **Sanchaay Karo app** is a platform for mutual fund investments; all investments are subject to **market risk**.