The below table shows a list Of the Children’s Mutual Funds based on AUM, NAV and minimum SIP.
| Name | AUM (Cr) | NAV (Rs) | Minimum SIP (Rs) |
| SBI Magnum Children’s Benefit Fund-Investment Plan | 2,824.86 | 42.24 | 5,000 |
| ICICI Pru Child Care Fund-Gift Plan | 1,393.77 | 337.34 | 100 |
| Aditya Birla SL Bal Bhavishya Yojna | 1,088.40 | 21.64 | 0 |
| Axis Children’s Fund-Compulsory Lock in | 934.89 | 28.67 | 100 |
| Axis Children’s Fund-No Lock in | 934.89 | 29.2 | 100 |
| Tata Young Citizen Fund | 390.39 | 67.84 | 0 |
| SBI Magnum Children’s Benefit Fund-Savings Plan | 121.21 | 115.92 | 500 |
| Union Children’s Fund | 59.22 | 12.16 | 100 |
| LIC MF Children’s Fund | 16.4 | 36.89 | 1,000 |
Introduction To Children’s Mutual Fund
Tata Young Citizen Fund
Tata Young Citizen Fund is designed to help parents invest in their children’s future, focusing on long-term capital appreciation. The fund’s objective is to generate returns through investments in a diversified portfolio of equities and equity-related instruments.
This fund, with an AUM of ₹390.39 crore, is a smaller but reliable option in the children’s investment space. Its expense ratio is on the higher side at 2.03%, but the fund compensates with strong performance. It has achieved a three-year CAGR of 13.05%, a one-year absolute return of 25.02%, and an impressive five-year CAGR of 19.48%.
ICICI Prudential Child Care Fund – Gift Plan
The ICICI Prudential Child Care Fund – Gift Plan aims to provide long-term capital appreciation through a diversified portfolio of equity and equity-related securities, specifically structured to meet the needs of young investors and their future financial requirements.
This fund manages an AUM of ₹1,393.77 crore, reflecting its significant presence in the child-care category. The expense ratio is 1.51%, slightly above average, but justified by its consistent performance. It has a three-year CAGR of 16.74%, a one-year absolute return of 34.17%, and an impressive five-year CAGR of 17.92%, making it a strong choice for long-term investments.
Aditya Birla Sun Life Bal Bhavishya Yojna
Aditya Birla Sun Life Bal Bhavishya Yojna is tailored to build a corpus for children’s future needs by investing in a mix of equity and debt instruments, aiming to provide capital appreciation along with some stability.
With an AUM of ₹1,088.40 crore, this fund is a strong contender in its category. It offers a very low expense ratio of 0.63%, making it cost-effective for investors. The fund has achieved a three-year CAGR of 12.87%, a one-year absolute return of 28.20%, and a five-year CAGR of 15.08%, showcasing consistent performance over time.
LIC MF Children’s Fund
LIC MF Children’s Fund is aimed at helping parents save and invest for their children’s future, providing an opportunity for long-term capital appreciation through a diversified portfolio of equity and equity-linked instruments.
This fund has an AUM of ₹16.40 crore, making it the smallest in this category. Despite its size, it carries a relatively high expense ratio of 1.71%. It has delivered a three-year CAGR of 11.44%, a one-year absolute return of 25.34%, and a five-year CAGR of 13.68%, highlighting its potential for moderate growth over time.
Axis Children’s Gift Fund – No Lock-in
The Axis Children’s Gift Fund – No Lock-in is designed to provide a mix of capital appreciation and income generation over the long term by investing in a diversified portfolio of equity and debt instruments.
This variant of Axis Children’s Fund shares the same AUM of ₹934.89 crore as its compulsory lock-in counterpart. It has a slightly lower expense ratio of 1.28%. The fund has delivered a three-year CAGR of 8.17%, a one-year absolute return of 24.64%, and a five-year CAGR of 13.96%, showing marginally better returns than the lock-in version.
Axis Children’s Gift Fund – Compulsory Lock-in
Axis Children’s Gift Fund – Compulsory Lock-in is similar to the no lock-in variant but comes with a lock-in period, encouraging long-term investment for children’s future needs.
This fund has an AUM of ₹934.89 crore and an expense ratio of 1.29%, positioning it as a medium-sized option in the category. Its three-year CAGR is 7.94%, with a one-year absolute return of 24.38% and a five-year CAGR of 13.75%. These figures indicate steady but slightly slower growth compared to its peers.
SBI Magnum Children’s Benefit Fund – Savings Plan
SBI Magnum Children’s Benefit Fund – Savings Plan aims to generate long-term capital appreciation through a diversified investment in equity and debt instruments, catering to the financial needs of children.
This fund has a relatively smaller AUM of ₹121.21 crore. It boasts a low expense ratio of 0.84%, appealing to cost-conscious investors. The three-year CAGR is 12.79%, with a one-year absolute return of 21.29% and a five-year CAGR of 13.93%, making it a stable option for moderate returns.
What Is Children’s Mutual Fund?
Children’s Mutual Funds are specialized investment vehicles designed to help parents save and invest for their children’s future financial needs, such as education or other long-term goals. These funds typically offer a mix of equity and debt investments tailored for long-term growth.
Children’s Mutual Funds often come with features like systematic investment plans (SIPs), lock-in periods until the child reaches a certain age and sometimes insurance coverage. They aim to provide a disciplined approach to long-term savings for children.
These funds can be structured as balanced funds, equity-oriented funds, or even as a fund of funds, depending on the scheme. The investment strategy is often aligned with the time horizon until the child needs the funds, typically becoming more conservative as that time approaches.
Features Of Children’s Mutual Fund
The main features of Children’s Mutual Funds include long-term investment focus, lock-in periods, goal-oriented investing, the potential for higher returns and sometimes additional benefits like insurance coverage. These features are designed to align with the specific needs of saving for a child’s future.
1. Long-term Focus: These funds are designed for long-term wealth creation, aligning with the extended time horizon of saving for a child’s future needs.
2. Lock-in Period: Many children’s funds have a lock-in period until the child reaches a certain age, encouraging disciplined, long-term investing.
3. Goal-oriented Investing: The fund’s investment strategy is typically aligned with specific goals like funding education, which shapes its risk and return profile.
4. Higher Return Potential: With a long investment horizon, these funds often have a significant equity component, aiming for higher long-term returns.
5. Additional Benefits: Some children’s funds offer extras like insurance coverage or the option to make the child a nominee, providing added financial security.
Best Children’s Mutual Fund
The table below shows the best Children’s Mutual Fund based on the lowest to highest expense ratio.
| Name | Minimum SIP (Rs) | Expense Ratio (%) |
| Tata Young Citizen Fund | 0 | 2.03 |
| LIC MF Children’s Fund | 1,000 | 1.71 |
| ICICI Pru Child Care Fund-Gift Plan | 100 | 1.51 |
| Axis Children’s Fund-Compulsory Lock in | 100 | 1.29 |
| Axis Children’s Fund-No Lock in | 100 | 1.28 |
| Union Children’s Fund | 100 | 0.86 |
| SBI Magnum Children’s Benefit Fund-Savings Plan | 500 | 0.84 |
| SBI Magnum Children’s Benefit Fund-Investment Plan | 5,000 | 0.78 |
| Aditya Birla SL Bal Bhavishya Yojna | 0 | 0.63 |
Children’s Mutual Fund India
The table below shows Children’s Mutual Fund India Based on the Highest 3Y CAGR.
| Name | Minimum SIP (Rs) | CAGR 3Y (%) |
| SBI Magnum Children’s Benefit Fund-Investment Plan | 5,000 | 21.85 |
| ICICI Pru Child Care Fund-Gift Plan | 100 | 16.74 |
| Tata Young Citizen Fund | 0 | 13.05 |
| Aditya Birla SL Bal Bhavishya Yojna | 0 | 12.87 |
| SBI Magnum Children’s Benefit Fund-Savings Plan | 500 | 12.79 |
| LIC MF Children’s Fund | 1,000 | 11.44 |
| Axis Children’s Fund-No Lock in | 100 | 8.17 |
| Axis Children’s Fund-Compulsory Lock in | 100 | 7.94 |
| Union Children’s Fund | 100 | 0 |
Top Children’s Mutual Fund
The table below shows Children’s Mutual Fund Based on exit load, i.e., the fee that the AMC charges investors when they exit or redeem their fund units.
| Name | AMC | Exit Load (%) |
| Axis Children’s Fund-No Lock in | Axis Asset Management Company Ltd. | 3 |
| SBI Magnum Children’s Benefit Fund-Savings Plan | SBI Funds Management Limited | 3 |
| SBI Magnum Children’s Benefit Fund-Investment Plan | SBI Funds Management Limited | 2 |
| Tata Young Citizen Fund | Tata Asset Management Private Limited | 1 |
| ICICI Pru Child Care Fund-Gift Plan | ICICI Prudential Asset Management Company Limited | 0 |
| Aditya Birla SL Bal Bhavishya Yojna | Aditya Birla Sun Life AMC Limited | 0 |
| Axis Children’s Fund-Compulsory Lock in | Axis Asset Management Company Ltd. | 0 |
| Union Children’s Fund | Union Asset Management Company Pvt. Ltd. | 0 |
| LIC MF Children’s Fund | LIC Mutual Fund Asset Management Limited | 0 |
Children’s Mutual Fund Returns
The table below shows children’s Mutual Fund Returns Based on 1Y return.
| Name | Minimum SIP (Rs) | Absolute Returns – 1Y (%) |
| SBI Magnum Children’s Benefit Fund-Investment Plan | 5,000 | 40.75 |
| ICICI Pru Child Care Fund-Gift Plan | 100 | 34.17 |
| Aditya Birla SL Bal Bhavishya Yojna | 0 | 28.2 |
| LIC MF Children’s Fund | 1,000 | 25.34 |
| Tata Young Citizen Fund | 0 | 25.02 |
| Axis Children’s Fund-No Lock in | 100 | 24.64 |
| Axis Children’s Fund-Compulsory Lock in | 100 | 24.38 |
| SBI Magnum Children’s Benefit Fund-Savings Plan | 500 | 21.29 |
| Union Children’s Fund | 100 | 0 |
Historical Performance Of Children’s Mutual Fund
The table below shows the historical Performance Of Children’s Mutual Fund Based on 5Y return.
| Name | Minimum SIP (Rs) | CAGR 5Y (%) |
| Tata Young Citizen Fund | 0 | 19.48 |
| ICICI Pru Child Care Fund-Gift Plan | 100 | 17.92 |
| Aditya Birla SL Bal Bhavishya Yojna | 0 | 15.08 |
| Axis Children’s Fund-No Lock in | 100 | 13.96 |
| SBI Magnum Children’s Benefit Fund-Savings Plan | 500 | 13.93 |
| Axis Children’s Fund-Compulsory Lock in | 100 | 13.75 |
| LIC MF Children’s Fund | 1,000 | 13.68 |
| SBI Magnum Children’s Benefit Fund-Investment Plan | 5,000 | 0 |
| Union Children’s Fund | 100 | 0 |
Factors To Consider When Investing In Children’s Mutual Fund
When investing in Children’s Mutual Funds, consider the investment horizon, fund performance, risk profile, expense ratio and additional features. These factors can significantly impact the fund’s suitability for your child’s future financial needs.
1. Investment Horizon: Assess how many years you have until the funds are needed. This will influence the appropriate risk profile for the investment.
2. Fund Performance: Evaluate the fund’s historical performance against its benchmark and peer funds over various periods.
3. Risk Profile: Consider the fund’s asset allocation and how it aligns with your risk tolerance and the time left until the goal.
4. Expense Ratio: Compare expense ratios across different children’s funds. Lower fees can have a substantial impact on long-term returns.
5. Additional Features: Look for any extra benefits like insurance coverage or flexible withdrawal options that may be valuable for your specific situation.
How To Invest In Children’s Mutual Fund?
To invest in Children’s Mutual Funds, start by assessing your financial goals for your child and determining the investment horizon. Research funds with strong long-term performance and features that align with your needs. Consider factors like expense ratios, lock-in periods and any additional benefits offered.
Choose between lump sum investments or Systematic Investment Plans (SIPs) based on your financial situation. SIPs can be particularly beneficial for long-term goals, allowing you to invest regularly and benefit from rupee cost averaging.
Open an account with Alice Blue. Complete the necessary documentation, including KYC requirements for yourself and your child. Initiate your investment and set up a systematic investment plan if desired. Regularly review the fund’s performance and adjust your strategy if needed as your child grows older.
Impact Of Market Trends On Children’s Mutual Fund
Market trends can significantly impact Children’s Mutual Funds, especially those with higher equity exposure. Economic conditions, interest rate changes and overall market sentiment can influence fund performance. However, the long-term nature of these funds can help smooth out short-term market fluctuations.
During bull markets, children’s funds with higher equity allocation may see strong growth. In bear markets, they might experience volatility, but the long investment horizon typically allows time for recovery and potential outperformance over the long term.
How Does Children’s Mutual Fund Perform In Volatile Markets?
Children’s Mutual Funds are designed for long-term investing, which can help mitigate the impact of short-term market volatility. However, their performance during volatile markets can vary depending on their asset allocation and investment strategy.
Funds with higher equity allocation may experience more significant fluctuations during market volatility. However, the long investment horizon associated with saving for a child’s future allows time to ride out market cycles. Some funds may also have built-in mechanisms to reduce equity exposure as the child approaches the age when funds are needed.
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Benefits Of Children’s Mutual Fund
The main benefits of Children’s Mutual Funds include goal-oriented investing, the potential for higher long-term returns, a disciplined savings approach, professional fund management and sometimes additional features like insurance coverage. These funds offer a structured way to save for a child’s future.
1. Goal-oriented Investing: These funds are specifically designed to help meet long-term financial goals for children, such as education expenses.
2. Long-term Growth Potential: With a long investment horizon, these funds often have significant equity exposure, aiming for higher returns over time.
3. Disciplined Savings: Features like lock-in periods and SIP options encourage regular, disciplined investing for the child’s future.
4. Professional Management: Experienced fund managers make investment decisions, potentially optimizing returns and managing risks.
5. Additional Protection: Some children’s funds offer insurance coverage or other features to provide added financial security for the child’s future.
Risks Of Investing In Children’s Mutual Fund
The main risks of investing in Children’s Mutual Funds include market risk, particularly for equity-oriented funds, the potential for underperformance, liquidity constraints due to lock-in periods and the risk of not meeting financial goals if returns are lower than expected.
1. Market Risk: Funds with significant equity exposure can experience volatility, potentially impacting returns, especially in the short term.
2. Underperformance Risk: The fund may not perform as well as expected, potentially falling short of the financial goals set for the child.
3. Liquidity Constraints: Lock-in periods can limit access to funds, which might be problematic if money is needed unexpectedly before maturity.
4. Interest Rate Risk: For the debt component of the fund, changes in interest rates can impact returns.
5. Inflation Risk: If returns don’t keep pace with inflation, the real value of the investment may be eroded over time.
Contribution Of Children’s Mutual Fund To Portfolio Diversification
Children’s Mutual Funds can contribute to portfolio diversification by providing a dedicated investment vehicle for long-term goals related to a child’s future. These funds often have a different investment horizon and risk profile compared to other investments in a parent’s portfolio.
By allocating a portion of savings to a Children’s Mutual Fund, investors can create a separate pool of assets specifically earmarked for their child’s future needs. This can help in better financial planning and risk management across the overall investment portfolio.
Who Should Invest In Children’s Mutual Fund?
Children’s Mutual Funds are suitable for parents, grandparents, or guardians who want to save and invest for a child’s future financial needs, such as education expenses. These funds are ideal for those who have a long investment horizon, typically 10 years or more before the funds are needed.
Investors should be comfortable with the lock-in periods often associated with these funds and have the capacity for regular, long-term investing. They should also be willing to accept some level of market risk in pursuit of potentially higher long-term returns.
Impact Of Fund Manager Expertise On Children’s Mutual Fund Performance
Fund manager expertise can significantly impact the performance of Children’s Mutual Funds. Skilled managers can potentially enhance returns through effective asset allocation, security selection and risk management strategies aligned with the fund’s long-term objectives.
Experienced managers can navigate different market cycles, adjusting the portfolio as needed while keeping the long-term goal in focus. Their expertise in balancing growth potential with risk management is crucial, especially as the child approaches the age when funds are needed.
FAQs – Best Children’s Mutual Fund
A Children’s Mutual Fund is a specialized investment scheme designed to help parents save for their children’s future needs, such as education or marriage. These funds typically offer long-term growth potential by investing in a mix of equities and debt instruments.
Top Children’s Mutual Funds #1: SBI Magnum Children’s Benefit Fund-Investment Plan
Top Children’s Mutual Funds #2: ICICI Pru Child Care Fund-Gift Plan
Top Children’s Mutual Funds #3: Aditya Birla SL Bal Bhavishya Yojna
Top Children’s Mutual Funds #4: Axis Children’s Gift Fund-No Lock-in
Top Children’s Mutual Funds #5: Axis Children’s Gift Fund-Compulsory Lock-in
These funds are listed based on the Highest AUM.
The best children’s mutual funds, based on expense ratios, include Tata Young Citizen Fund, LIC MF Children’s Fund, ICICI Pru Child Care Fund-Gift Plan, Axis Children’s Fund-Compulsory Lock in, and Axis Children’s Fund-No Lock in. These funds focus on long-term financial goals for children’s futures.
To start a mutual fund for your child, research child-specific or long-term growth funds. Open an account with Alice Blue, complete KYC for yourself and your child, choose a suitable fund and start investing through lump sum or SIP options.
Yes, Children’s Mutual Funds are subject to taxation. The tax treatment depends on the fund’s category (equity or debt) and holding period. Long-term capital gains on equity funds exceeding ₹1 lakh per year are taxed at 10%, while debt fund gains are taxed at 20% with indexation benefits.
The lock-in period for Children’s Funds varies by scheme. Many funds have a lock-in until the child reaches 18 or 21 years of age. Some allow partial withdrawals for education expenses. Check the specific fund’s terms before investing.
Yes, you can gift mutual fund units to your child. This can be done by transferring existing units or by investing in their name. Remember that if the child is a minor, a guardian will need to manage the investment until they reach majority.
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Disclaimer: The above article is written for educational purposes, and the companies’ data mentioned in the article may change over time.
