Parents of young kids often fret over the financial future of their dependents. In order to build a substantial corpus during their growing-up years, some of the far-sighted parents invest in an array of investment instruments including mutual funds.
One of the children-specific categories is known as ‘children’s mutual funds’ which falls under the broader section of solution-oriented funds.
What are children’s funds?
Children’s mutual funds refer to the schemes catering to young children that are invested into by the parents to accumulate enough savings for the future of their children.
These schemes have a lock-in period of five years but most investors stay invested till the time children are growing up.
These funds invest in both debt and equity. For instance, LIC MF children's Gift Fund has allocated 86 percent in equity and 10.8 percent in debt. Tata Young Citizens Fund has invested 97.8 percent in equity and remaining in cash.
There are a total of 10 children’s mutual funds, shows the monthly data revealed by the Association of Mutual Funds in India (AMFI).
|Category||Number of schemes||Net AUM ( ₹crore)|
(Data as on Aug 31, 2023)
Incidentally, these schemes are less popular than the other category of solution-oriented mutual funds i.e., retirement funds that have a total of 26 schemes.
Children’s mutual funds have a total net assets under management (AUM) of ₹16,525 crore as on Aug 31, 2023. The two most popular schemes in this category are HDFC Children's Gift Fund ( ₹7,396 crore) and UTI Children's Career Fund-Savings Plan ( ₹4,228 crore).
Returns posted by children’s funds
These mutual fund schemes have delivered varied returns in the range of 8-15 percent per annum, the table below indicates.
|Children’s funds||5-year-returns (%)|
|HDFC Children's Gift Fund||15.08|
|LIC MF Children's Gift Fund||10.79|
|UTI Children's Career Fund-Savings Plan||8.17|
|Tata Young Citizens Fund||15.45|
(Returns as on Oct 3, 2023)
As one can examine the table above, while UTI Children’s Career Fund-Savings Plan gave an annualised return of 8.17 percent, Tata Young Citizens Fund gave 15.45 percent annualised returns and HDFC Children's Gift Fund delivered an annualised return of 15.08 percent in the past five years.