Children’s Mutual Fund AUM Touches Rs 20,081 Cr In May

The Assets under Management (AUM) of children’s mutual fund reached Rs 20,081.35 crore in May 2024 after witnessing nearly 142 per cent surge up from Rs 8,285.59 crore in May 2019, and increased by nearly 31 per cent from Rs 15,375.40 crore in May 2023.

Icra Analytics said in its latest report that as of 31 May 2024, the children’s mutual fund witnessed a category average on compound annual growth rate (CAGR) returns of 22.64 per cent, 14.68 per cent and 12.71 per cent over a 1-year, 3-years and 5-years period, respectively.

The returns compared to fixed deposits of State Bank of India are significantly higher, which on an average gave 6.80 per cent, 6.75 per cent and 6.50 per cent returns over a 1-year, 3-years and 5-years period.

Ashwini Kumar, Senior Vice President and Head Market Data at Icra Analytics said, “Children’s mutual funds come with a lock in period of 5-years or more and this inculcates a disciplined investing and savings habit for investors and discourages withdrawals.

The exposure to both equity and debt results in diversification which helps to mitigate risk that arises out of individual stock pricing and helps maximise returns. Moreover, the ownership of the investment can be easily transferred once the child becomes a major and reaches adulthood. All these factors are contributing to a good growth in AUM of children’s mutual funds over the last four-to-five years.”

There was growth of 28 per cent, 102 per cent and 23 per cent in net flows into children’s mutual funds over a 1-year, 3-years and 5-years period. The number of folios also increased by around 4 per cent at 29.93 lakh folios in May 2024 compared to 28.83 lakh in May 2019.

There are around eight children’s mutual funds available in the market and the AUM of HDFC Children’s Gift Fund is among the highest accounting for nearly 52 per cent of the total AUM of children’s mutual funds at Rs 9,018.60 crore as on May 2024.

UTI Children’s Hybrid Fund accounts for around 25 per cent at Rs 4,433.81 crore, followed by SBI Magnum Children’s Benefit Fund Investment accounting for 12 per cent at Rs. 2,023.42 crore and UTI Children’s Equity Fund for around 6 per cent at Rs. 1,010.49 crore.

On May 2024, the AUM of Axis Children’s Gift Fund growth was at Rs 822.90 crore; SBI Magnum Children’s Benefit Fund – Savings Plan at Rs 110.77 crore; Union Children’s Fund at Rs 46.70 crore and the AUM of LIC MF Children’s Fund at Rs 15.70 crore.