Children’s Mutual Funds: Many parents with young children often worry about securing their dependents’ financial future. To accumulate a significant fund for their children’s upbringing, some parents choose to invest in various financial yieldings, including mutual funds.
What are children’s mutual funds?
One specific category tailored for children is referred to as ‘children’s mutual funds,’ and it falls within the broader category of solution-oriented funds. Children’s mutual funds are investment schemes designed for young children, wherein parents invest to accumulate savings for their children’s future needs.
While these schemes typically come with a five-year lock-in period, many investors choose to stay invested for a longer duration as their children continue to grow. These funds employ a mix of debt and equity in their investment strategies. For instance, the LIC MF Children’s Gift Fund allocates 86 percent to equity and 10.8 percent to debt, while the Tata Young Citizens Fund primarily invests 97.8 percent in equity with the remainder in cash.
How many children’s mutual funds are there?
The Association of Mutual Funds in India (AMFI) monthly data reveals that there are a total of 10 children’s mutual funds available. Interestingly, these schemes are less popular compared to another category of solution-oriented mutual funds, namely retirement funds, which have a total of 26 schemes.
As of August 31, 2023, children’s mutual funds collectively manage a total net assets under management (AUM) of ₹16,525 crore. The two most favoured schemes within this category are the HDFC Children’s Gift Fund with ₹7,396 crore in AUM and the UTI Children’s Career Fund-Savings Plan with ₹4,228 crore.
Returns by posted by Children’s mutual funds
| 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 |
As you can see in the table above, the UTI Children’s Career Fund-Savings Plan yielded an annualized return of 8.17 percent, while the Tata Young Citizens Fund generated an impressive 15.45 percent annualized return. Similarly, the HDFC Children’s Gift Fund delivered a substantial annualized return of 15.08 percent over the past five years.
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