Best Return Funds for Children: In order to secure the future of children financially, it is very important to invest right at the right time. Children’s mutual funds can prove to be a great option for this purpose. In the last 5 years, at least 8 funds of this category have given annual returns from 12% to 19%. If an investor would have started a monthly SIP of Rs 5000 in these funds 5 years ago, then its current fund value would have increased to Rs 4.50 lakh. The details of these top 8 funds will further explain, but first we know why the Children’s mutual funds are special.
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Why are Children’s Mutual Funds special?
Children’s mutual funds are the solution oriented mutual funds, which are specially designed keeping in mind the future of children. A big difference in the Children’s mutual funds compared to common mutual funds like flexi cap or multi-cap is that they have a lock-in period. This lock-in period is 5 years or until the child is adult. Due to this lock-in, it is necessary to invest for a long period in Children’s mutual funds, which gives the benefit of compounding. Also, it becomes easy for the fund manager to invest with a long term view.
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Children’s Mutual Funds giving best returns in 5 years
Here we are giving information about such top 8 Children’s mutual funds, which have given 12% or more returns in the last 5 years.
1. HDFC Children’s Fund
5 years Return (CAGR): 18.11 % (Regular), 19.11 % (Direct)
5000 rupees Monthly SIP after 5 years Value: 4,43,523 rupees (Direct Plan)
Benchmark Index: Nifty 50 Hybrid Composite Debt 65:35 Index
Risk level: Very high (very high)
2. Tata Young Citizens Fund
5 years Return (CAGR): 18.26 % (regular), 19.04 % (direct)
5000 rupees month after 5 years Value: 4,23,247 rupees (Direct Plan)
Benchmark Index: Nifty 500 Total Return Index
Risk level: Very high (very high)
3. Uti Children’s Equity Fund
5 years Return (CAGR): 16.25 % (regular), 17.46 % (Direct)
5000 rupees Monthly SIP after 5 years Value: 4,18,427 rupees (Direct Plan)
Benchmark Index: Nifty 500 Total Return Index
Risk level: Very high (very high)
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4. ICICI Prudential Child Care Fund Gift Plan
5 years Return (CAGR): 16.35 % (regular), 17.19 % (direct)
5000 rupees Monthly SIP after 5 years Value: Rs 4,50,381 (Direct Plan)
Benchmark Index: Nifty 50 Hybrid Composite Debt 65:35 Index
Risk level: Very high (very high)
5. SBI Magnum Children’s Benefit Fund – Savings Plan
5 years Return (CAGR): 13.48 % (regular), 14.00 % (Direct)
5000 rupees month after 5 years Value: 4,15,216 rupees (Direct Plan)
Benchmark Index: Nifty 50 Hybrid Composite Debt 15:85 CONSERVATIVE Index
Risk Level: Moderately High (Moderately High)
6. Axis Children’s Fund
5 years Return (CAGR): 11.96 % (regular), 13.29 % (direct)
5000 rupees month after 5 years Value: Rs 3,88,698 (Direct Plan)
Benchmark Index: Nifty 50 Hybrid Composite Debt 65:35 Index
Risk level: Very high (very high)
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7. Aditya Birla Sunlife Children’s Future Plan
5 years Return (CAGR): 11.41 % (regular), 13.27 % (Direct)
5000 rupees Monthly SIP after 5 years Value: Rs 3,94,989 (Direct Plan)
Benchmark Index: Nifty 500 Total Return Index
Risk level: Very high (very high)
8. LIC MF Children’s Fund
5 years Return (CAGR): 11.55 % (regular), 12.45 % (direct)
5000 rupees month after 5 years Value: Rs 3,81,530 (Direct Plan)
Benchmark Index: Crisil Hybrid 35+65 Aggressive Index
Risk level: Very high (very high)
SBI Magnum Children’s Benefit Fund’s risk level low
The asset allocation of different schemes given above is different, which you can guess by looking at their benchmark index. There is more date exposure in a scheme and in some equity. These include the SBI Mutual Fund scheme SBI Magnum Children’s Benefit Fund has a risk level moderately high (Moderately High), while all other schemes have been given a rating of ‘too much’ risk on the platter.
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Who should invest in Children’s Mutual Fund?
Children’s mutual funds can be a better option for investors who want to invest in a disciplined manner for their children. Such funds have a lock-in period, due to which investors remain in the market for a long time and also get the benefit of compounding. Also, this scheme gives fund managers a chance to adopt long -term investment strategy, which is expected to get better returns. Through investment in these funds, corpus can be prepared for children’s higher education or other expenses. But at the same time it should also be kept in mind that the return of investment made in mutual funds is usually connected to the market, so there is no guarantee of the previous returns to continue in the future.
(Disclaimer: The purpose of this article is just to give information, do not recommend investing in a fund or scheme. Make decisions related to investment only after getting complete information and taking the opinion of investment advisor.)
