In an era plagued by grave economic challenges, finding a safe and secure financial instrument to invest in is indeed a tough job, especially when the financial objective of the investors is to fund their child’s education. This is why most people tend to either rely on their savings or prefer to approach a lending institution for availing a loan product. In both cases, they are left with little money to adequately plan for their child’s future.
Thus, it comes as no surprise that mutual funds have steadily begun to gain the stature of being a reliable investment destination. If you are willing to consider this option, here is a list of the top performing mutual funds which will help you build a good corpus over time:
1. ICICI Prudential Child Care Fund
Launched in 2001, this is a hybrid fund with assets under management (AUM) to the tune of Rs. 627 crores. The basic objective of this fund is to enable long-term capital appreciation by making prudent investments in equity and debt instruments. It has a diverse portfolio, wherein assets are primarily allocated to the sectors of healthcare and finance. The fund has generated an average annual return of 16.5% since its inception. It charges no exit load for a lock-in period of 5 years or until your child comes of age.
2. SBI Magnum Children’s Benefit Fund
Previously known as the SBI children’s benefit plan, this scheme aims to generate income consistently by investing in moderately risky instruments like money-market and debt funds. Although its AUM is merely Rs. 62 crores, its diversification into sectors as diverse as FMCG, construction, engineering and textiles gives it an edge over others. In the last 3 years, the fund has yielded annual returns at a rate of 14.5%.
3. UTI Children Career Fund
As the name itself suggests, this multi-cap fund with an AUM of about Rs. 275 crore aims to help investors earn money in the long-term so that they do not have to worry about the education of their children. It invests in equity instruments only and has largely allocated its assets to the financial and energy sectors. The average returns of this fund since 2004 have been stationed at around 9.7%.
4. Aditya Birla Sunlife Equity Fund
Mostly invested in equities, the Aditya Birla Sunlife equity fund has an AUM that is greater than Rs. 8,600 crores. Its portfolio principally consists of reliable names like HDFC, ICICI, and Maruti Suzuki. In the past three years, the fund has generated steady returns at a rate of 14.3%. Owing to its sterling performance and the simple fact that it allows investments as small as Rs. 1,000 to be made, this fund can be considered by parents who have children below 10 years of age.
5. Mirae Asset Emerging Bluechip Fund
The Mirae Asset emerging Bluechip fund contains stocks from the financial, FMCG, and textile domain. This form of diversification ensures that the fund continues to generate average annual returns as high as 17%. This fund is essentially a systematic investment plan which requires an investment of Rs. 5,000 in the initial period and Rs. 1,000 for every month thereafter. As a parent, you can apply for either the growth plan or the dividend plan. Though they have slightly different NAVs, they both reap equal rewards.
6. Reliance Top 200 Fund
This fund is basically a large-cap retail plan which requires parents to begin their investment period with a sum as little as Rs. 100. Having an AUM of approximately Rs. 11,000 crores, it is invested in the equities of banks, pharmaceutical companies, and software products. In the last 5 years, the fund has generated about 18% returns. This fund is suitable for parents with children aged between 10 and 18 as it provides stable yields through a long-time interval.
7. ICICI Prudential Balanced Fund
A variant of the ICICI childcare scheme, this fund is primarily invested in the equity and debt instruments of companies like Hindustan Unilever and banks like the State Bank of India. The debt part of the fund makes sure that it continues to earn long-term returns, which in the last five years have stayed in the range of 10% to 12%. However, even for parents, this fund charges an exit load of 1% if it is redeemed within a period of 365 days.
8. Aditya Birla Sunlife Front-line Fund
Like its counterpart, this fund is fundamentally invested in equities. Nonetheless, it also permits investors to build a sustainable corpus through a systematic investment plan. Its portfolio mostly consists of stocks from the sectors of finance, construction, and engineering. The returns this fund has generated over the last 5 years hover around 12.6%. When accumulated, the gains made from this scheme can provide a sufficient amount of money to fund your child’s education.
9. Canara Robeco Emerging Equities
Launched in 2005, the Canara Robeco emerging equities fund was conceived to be of a mid-cap size. Since then, it has provided an average annual return of 18.5%. It has a varied portfolio which contains stocks from well-performing companies like Reliance Industries, Bajaj Finserv, ITC etc. However, instead of the growth plan, it would be wise for parents to invest in its dividend section.
10. Franklin India Income Opportunities Fund
Designed as an open-ended scheme, the Franklin India income opportunities fund is considered to be one of the best mutual funds to invest in while planning for your child’s future. It has had a consistent performance which ranges between 8%-10% and has built its portfolio with stocks from insurance companies and government entities. With an AUM of over Rs. 3,000 crores, this fund assures lasting monetary security.
The cost of providing a decent education to children has now begun to skyrocket. Be it primary school or college, the prices are far too high for most parents to afford. This is precisely why investing in child-oriented mutual fund schemes is a monetarily prudent decision. Being professionally managed and diversified, they ensure that you are provided with a sufficiently smart and efficient solution for managing your child’s educational expenditure.