Child Care Plan: Child care funds are mostly hybrid mutual funds. They are well diversified. In these, a part of the fund is invested in debt schemes or debt bonds. At the same time, a part is also invested in equity, which gives higher returns than debt.
Child Mutual Funds India: Every parent dreams of a bright future for their children. For this, it is important to start financial planning as early as possible for their better future. Because higher education or such expenses are not easy when children grow up. The future of children will be better only when they are financially secure. When it comes to financial planning for children, there are many investment options available in the market. One of these is Child Mutual Funds, which few people pay attention to. This is such an investment option, which can create a large corpus for your child in the long term.
Features of Child Care Funds
Mutual funds issue schemes keeping in mind the future of children and according to different investment goals, in which many schemes are being run by mutual fund houses in the name of Children’s Gift Fund, Children’s Assets Plan and Children’s Career Plan. Child care funds are mostly hybrid mutual funds. They are well diversified. In these, a part of the fund is invested in debt schemes or debt bonds which are considered safe, while a part of the corpus is also invested in equity which gives higher returns than debt bonds.
Example of a fund creating a large corpus
With the example of a scheme in a child fund, you can understand how it can be helpful for your child when he becomes an adult. Here we have taken the example of a scheme ICICI Pru Child Care Fund, in which 22 years of SIP data is available.
ICICI Pru Child Care Fund
Launch Date: August 31, 2001
Returns since launch: 16% p.a.
Minimum lump sum investment: Rs 5,000
Minimum SIP: Rs 100
Total Assets: Rs 1,258 crore (April 30, 2024)
Expense Ratio: 2.20% (April 30, 2024)
SIP returns of the fund (data available for maximum 22 years)
Monthly SIP: Rs 5000
Annualized return in 22 years: 15.07%
Total investment in 22 years: Rs 14,20,000
Value of SIP after 22 years: Rs 1,11,93,954
That is, if someone starts a SIP of Rs 5000 in the scheme on the birth of the child, then Rs 1.12 crore is ready for the child as soon as he turns 22.
(Calculator Source: Value Research)
Return Chart on Lumpsum Investment
10 Year Return: 13.31% p.a.
7 Year Return: 13.56% p.a.
5 Year Return: 15.48% p.a.
3 Year Return: 19.60% p.a.
1 Year Return: 42.34% p.a.
These funds are also on top in giving returns (5 years return)
HDFC Children’s Gift Fund: 18.1% per annum
Tata Young Citizens Fund: 18.1% per annum
UTI Children’s Equity Fund: 17.1% per annum
ABSL Bal Bhavishya Yojana: 13.2% per annum
AXIS Children’s Gift Fund: 13% per annum
LIC MF Children’s Gift Fund: 12.8% per annum
SBI Magnum Children’s Benefit Fund: 11.9% per annum
Mutual Fund SIP is better for children
If there is a financial goal for the future of children, then it will be for the long term. Usually its duration can be from 10 years to 20 years. Market risks are covered in the long term. In such a situation, it is wise to invest in equity funds through Systematic Investment Plan (SIP). For children, investment can be made for a long time in an equity mutual fund with a good track record.
(Disclaimer: Investment in mutual funds is subject to market risks. Only fund performance and fund information is given here. Consult your financial advisor before investing.)
