Childrens Mutual Funds
Plan a corpus for your child’s future needs with Children’s Funds. Get market-linked returns that are inflation-adjusted.
- Wealth creation through compounding returns
- Easy liquidity and Accessibility
- Spread risk through diversification
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What are
Children’s mutual funds?
A children’s mutual fund is a solution-oriented fund which aims to accumulate a corpus for your child’s future. It has a lock-in period of 5 years or till the child attains majority, whichever is earlier.
Advantages of Children’s Mutual Funds
Long-Term Growth
Stay invested in equity mutual funds for a long term and grow your savings as volatility tends to smoothed out in long term.
Diversification
Choose equity securities across different market caps and sectors and invest in a diversified portfolio to enhance the return potential.
Tax Saving
Save tax on investment with Equity Linked Saving Schemes. Claim a deduction of up to Rs.1.5 lakhs under Section 80C.
Wealth Creation
Create optimal funds for your financial goals with the returns offered by Equity Funds and achieve financial independence.
Types of Children’s Mutual Funds
Funds Based On Duration
Overnight Fund
Securities mature in a day
Liquid Fund
Maximum maturity of securities is 91 days
Ultra Short Duration Fund
Bonds matures between 3 and 6 months
Money-Market Fund
Investment in money market securities with an investment tenure up to 1 year
Short Duration Fund
Macaulay duration of the fund ranges from 1-3 years
Medium Duration Fund
Maturity of bonds in between 3-4 years
Medium to Long Duration Fund
Maturity of bonds ranges from 4-7 years
Dynamic Bond Fund
Portfolio invests in securities across durations
Funds Based On Market Capitalisation
Corporate Bond Fund
Portfolio invests primarily in corporate bonds
Credit Risk Fund
Investment in securities with the second highest credit rating
Banking and PSU Fund
Debt instruments issued by banks and PSUs
Gilt Fund
Investment in government securities
Understanding Children’s Funds
What are Children’s Funds?
Children’s funds are solution-oriented mutual fund schemes with the objective of creating a fund for your child’s future needs. These funds have a lock-in period of 5 years or till your child becomes an adult.
What are the features of Children’s Funds?
- Lock-in of 5 years or till child’s majority, whichever is earlier
- SIP or lump sum investment
- Asset allocation in equity and debt securities
- Long-term wealth creation
- Open-ended schemes with professional fund management
What should you know before investing in Children’s Funds?
- There’s a lock-in period which restricts liquidity in the initial investment years
- You can choose from hybrid or equity-oriented funds based on your risk profile
- If you invest in equity-oriented funds, invest with a long-term view to ride out short-term volatility.
- Hybrid funds add the stability of debt and lower volatility risks
- The returns depend on the underlying assets and benchmark index
Who should invest in Children’s Funds?
- Parents looking for a dedicated investment avenue for their child
- Investors who have a long-term investment horizon
- Parents who want market-linked returns on their investments
What is the tax implication of Children’s Funds?
- Equity-oriented funds
- Returns up to Rs.1 lakh are tax-free
- Returns exceeding Rs.1 lakh are taxed at 10%
- Debt-oriented funds
- Returns earned are taxed at income tax slab rates
- Equity-oriented funds
- Returns up to Rs.1 lakh are tax-free
- Returns exceeding Rs.1 lakh are taxed at 10%
- Growth option
- Accumulate the returns over the investment tenure for compounding benefit
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