Mumbai, July 14 -- Mutual funds are cautious about newly introduced life-cycle funds, despite the Securities and Exchange Board of India (Sebi) pitching them as simple, goal-based investment vehicles that automatically reduce risk as investors near their financial milestones.

"Life-cycle funds have some potential in the long term. However, there is not much excitement about it since this is not a good environment for an NFO (new fund offer). This may not be the right time to start a new scheme," said a senior executive at a fund house on the condition of anonymity.

A life-cycle fund follows a predetermined "glide path", gradually shifting investments from growth-oriented assets such as equities towards debt as it approaches maturity.

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