5 top child-focused mutual fund investment plansMany parents are these days looking for child investment plans. They want to save and invest for a child’s higher education and marriage. Some parents have more than one children, so the worries are bigger. If you have one child or more, the basic tenet remains the same – you have to invest in a product that generates a high rate of return. Education cost today is growing at a double digit rate. Marriage cost too is rising at a sharp clip. So, you will be needing lots of money. Sample this: Rs 10 lakh today with an average inflation rate of 8% has the same purchasing power as Rs 46 lakh 20 years later. Given that most of our child linked financial goals are long-term say 15 to 20 years, beating inflation is very important for us. Child MF plans are one of the options to build a corpus for your child linked goals. RupeeIQ takes a close look at some of the available options.

Fund 1-Month Return 3-Month Return 1-Year Return 3-Year Return 5-Year Return 10-Year Return
Axis Children’s Gift – Regular Plan -3.03 -9.33 -2.21
HDFC Children’s Gift Fund -1.43 -4.81 -1.41 10.38 15.78 18.95
ICICI Prudential Child Care Fund – Gift Plan -1.2 -3.46 1.01 9.1 16.26 17.12
LIC MF Children’s Gift Fund -4.78 -7.36 -11.82 2.59 7.06 8.28
SBI Magnum Children’s Benefit Fund -0.19 -0.61 2.66 13.21 15.87 12.02
UTI Children’s Career Fund-Savings Plan – Regular Plan -2 -4.39 -1.25 7.36 12.15 12.06
# More than 1 year return is expressed in CAGR

HDFC Children’s Gift Fund

This is a hybrid scheme. It falls in the hybrid aggressive category. The fund has an investor asset of Rs 2,300 crore. The scheme was launched in 2013. The scheme invests 65% of the money in equity and the rest is invested mostly in debt/fixed income. This structure allows the fund to participate in equity markets but has a good fixed income cushion in case equities decline. The last 1-year returns have not been good because stock markets fell. Over the last 3-year period, HDFC Children’s Gift Fund has generated 11.4% return annually. Over the last 5-year time period, thanks to bullish stock markets, the fund has generated 16.7%, which is great by any standard. Do remember that HDFC Mutual Fund in Oct-2017 decided to merge HDFC Children’s Gift Fund Savings Plan into HDFC Children’s Gift Fund Investment Plan.

ICICI Prudential Child Care Fund – Gift Plan

This scheme was earlier known as ICICI Prudential ChildCare-Gift. Like the HDFC scheme, this plan too falls in the hybrid aggressive category. The fund has investors assets of less than Rs 600 crore. It was launched in 2013. The 65% equity stance helps in rising markets. In the last 3-year period (ending November 1, 2018), the fund delivered 10% return CAGR. In 5-year period, the fund gave more than 17% return. On both 3 and 5-year periods, the fund has been able to beat its peers and benchmark. The scheme looks at blended investment strategy when it comes to equities. Do note that from May 2018, ICICI Prudential Child Care Study Plan was merged with ICICI Prudential Child Care Gift Plan.

SBI Magnum Children’s Benefit Fund

Unlike the first two plans discussed above, SBI Magnum Children’s Benefit Fund has a slightly different character. It is a hybrid fund, but it is much more conservative in nature. This plan was earlier known as SBI Magnum Children’s Benefit Plan. The scheme is much smaller in size, despite being launched in 2002. It has investor assets worth Rs 60 crore. The fund has more debt play than equity. In fact, stocks form only 25% of its assets. The fund has delivered a respectable 13% CAGR gain in three years, 16% gain in five years and 12% gain in 10 years time-frame. Even with its very conservative asset profile, the fund has delivered solid returns.

UTI Children’s Career Fund-Savings Plan

The fund earlier called UTI CCP Balanced. Launched in 1993, this is one of the oldest schemes among all categories. It has investor assets worth over Rs 3,700 crore. This is a hybrid balanced fund. It has a portfolio mix of debt and equity in the range of 60–40%. The scheme is for long-term investors and accounts for adjustment of asset allocation and the portfolio mix based on prevailing market conditions. The fund focusses on the high credit quality of debt portfolio and growth characteristics of equity portfolio with large cap dominance. In terms of returns, the fund has delivered 7.3% CAGR in the last three years, 12.1% CAGR in the last five years and 12.06% in last 10 years.

Axis Children’s Gift

This is a relatively new fund launched in 2015. It falls in the hybrid balanced category. The fund has an asset size of Rs 382 crore. It has one of the highest expense ratios in its category. This fund has a minimum and compulsory 5-year lock-in. Equity exposure can range between 40% to 75%. Fixed income is 25-60%. Its fixed-income strategy has the flexibility to invest in the entire range of debt instruments across the yield curve, while in equity the fund focusses on building a diversified portfolio of strong growth companies. No long-term track record is available for the fund given that it has not completed three years.

Kumar Shankar Roy

Kumar Shankar Roy is contributing editor with RupeeIQ. He can be contacted on contact@rupeeiq.com