Children’s Gift Mutual Funds
What is a Children's Gift Mutual Fund?
Children's Gift Funds are mutual fund schemes that offer returns that would offer financial advantages to your children for needs such as meeting marriage expenses, future educational needs, etc. This creates long term capital appreciation and would fall under the category of Hybrid Funds or Balanced Mutual Funds. Gift Funds invest in a combination of Debt and Equity Instruments. An example of Debt Instrument is Fixed Income Securities and of Equities is shares.
These are classified further as "Hybrid-Debt Oriented" or "Hybrid-Equity Oriented" Funds, based on the level of exposure to Equities. If the equity exposure is more than 60% and the remaining is invested in debt assets, the mutual fund is treated as an Equity Oriented Balanced Fund. However, if debt exposure is more than 60% and the remaining is invested in equity assets, the mutual fund is treated as a Debt Oriented Balanced Fund.
Key points to evaluate before buying Children's Gift Mutual Funds
Objective of the Fund - Find out the asset allocation strategy used in the fund and the investment strategy.
Factors to be looked into are whether the funds are equity-oriented or debt-oriented. One should also evaluate the exposure to risk.
Lock-in Period - Most gift mutual funds provide an elective lock-in facility. This enables the investor to ensure that the investment will be protected till the child becomes 18 years old.
Top Children's Gift Mutual Funds in India
