Aditya Birla Sun Life Mutual Fund has filed papers with SEBI for Aditya Birla Sun Life Bal Bhavishya Yojna product. This will be an open ended fund for investment for children having a lock-in for at least five years or till the child attains age of majority (whichever is earlier). The fund will come with two plans – wealth (minimum 65% equity) and savings (minimum 75% debt). Let us find out its details.
Under the Wealth Plan, the primary investment objective will be to seek generation of capital appreciation. This will be done by creating a portfolio that is predominantly investing in equity & equity related securities and debt and money market instruments.
Under the Savings Plan, the investment objective will be to generate income and capital appreciation by predominantly investing in a diversified portfolio of debt and money market securities along with equity and equity related instruments.
The Wealth Plan is a predominantly equity oriented plan. The strategy aims to invest in a well-diversified portfolio of equity and equity related securities along with debt and money market instruments. The fund manager proposes to concentrate on business and economic fundamentals driven by in-depth research techniques and employing the full potential of the research team at the AMC. The stock selection
process proposed to be adopted is generally a bottom-up approach seeking to identify companies with long term sustainable competitive advantage.
The Wealth Plan would also use a top down discipline by ensuring representation of companies from all key sectors in respective benchmarks. The plan’s investment universe shall comprise all listed and/or unlisted stocks.
The scheme has no explicit constraints either to maintain or limit the portfolio turnover.
The fund also invests in various debt securities and money market instruments issued by corporate and/or state and central government with the aim to controlling volatility and providing cash flows on a continuous basis.
The Savings Plan predominantly invests in Debt and Money Market Instruments and would seek to generate regular returns. The plan will invest in various debt securities and money market instruments issued by corporates and/or state and central government. With the aim of controlling risks, rigorous in-depth credit evaluation of the instruments proposed to be invested in will be carried out by the Investment Team of the AMC. The AMC is also guided by the ratings of rating agencies such as CRISIL, CARE and ICRA.
The performance of Aditya Birla Sun Life Bal Bhavishya Yojna will be benchmarked. The Wealth Plan will have S&P BSE 200 as the benchmark. The Savings Plan will have CRISIL Hybrid 85+15 Conservative Index as benchmark.
Ajay Garg and Pranay Sinha.
Ajay Garg manages Aditya Birla Sun Life MNC Fund, Aditya Birla Sun Life Index Fund and Aditya Birla Sun Life Dual Advantage Fund – Series I.
Pranay Sinha manages Aditya Birla Sun Life Equity Hybrid ’95 Fund, Aditya Birla Sun Life Government Securities Fund, Aditya Birla Sun Life Dynamic Bond Fund and Aditya Birla Sun Life Gold ETF.
For Which Investors
Any eligible person, proposing to make a gift to a child of less than 18 years of age, can apply for subscription to the units of the scheme. The list includes resident adult individuals either singly or jointly (not exceeding three) or on an Anyone or Survivor basis, a court-appointed guardian of a child, Partnership Firms & LLPs etc.
The age of the beneficiary child, i.e. the Unit holder, must be less than 18 years on the date of the investment by the Investor / Applicant. The Guardian of the minor should either be a natural guardian (i.e. father or mother, as applicable) or a court appointed legal guardian.
A copy of birth certificate, passport copy, etc evidencing date of birth of the minor and relationship of the guardian with the minor should be mandatorily attached with the application. Subsequent purchases of units may be made until the beneficiary child completes 18 years of age.
All transactions / standing instructions / systematic transactions etc. will be suspended i.e. the account will be frozen for operation by the guardian from the date of beneficiary child completing 18 years of age. Mutual Fund will send a notice to unit holders at their registered correspondence address advising the minor to submit, on attaining majority, an application form along with prescribed documents to change the status of the account from ‘minor’ to ‘major’. KYC Acknowledgment Letter of Unit holder becoming major should also be provided.
The Wealth Plan will be taxed like equity funds, while the Savings Plan will be taxed like a debt fund.
For redemption of units before child attains 18 years of age or 5 years from the date of allotment, there is 1.00% load on applicable NAV.
For redemption of units after the completion of lock-in-period, there is no exit load.
There are many funds in the MF mart with ‘child’ their name. ABSL MF has tried to use a hindi word ‘Bal’ (means child) to connect with the wider Hindi-speaking investor audience. Popular child plans include HDFC Children’s Gift Fund, ICICI Prudential Child Care Fund – Gift, Study Plan, SBI Magnum Children’s Benefit Fund, Axis Children’s Gift Fund, and UTI Children’s Career Fund-Savings Plan among others. Most of them are hybrid funds in nature.
RupeeIQ take – Child plans have nothing really distinctive about them. They are a solution-oriented fund. But investors should really look at the investment strategy of such funds. There are no real tax-breaks for investing in child plans. Also, they have a lock-in for at least 5 years. Invest in a child plan only if you think the available largecap, multicap funds or balanced funds are not good enough.