Investment in Children’s Mutual Funds is Increasing; Checkout how are the Returns?

People are now investing more money in children's mutual funds than before. The main reason for this is believed to be the sharp increase in the cost of children's education.

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Investment in children’s mutual funds has increased rapidly in recent years. According to the data, the assets being managed by such mutual funds have increased by about 142 percent in the last 5 years. ICRA Analytics has given information about this figure in a recent report.

Managed assets increased in this way

According to the report, the AUM (Asset Under Management) of Children Mutual Fund increased to INR 20,081.35 crore in the month of May. This figure was just INR 8,285.59 crore 5 years ago i.e. in May 2019. That is, during the last 5 years, the figure of asset under management has gone up by 142 percent. The report says that the asset under management has increased by about 31 percent on an annual basis.

   

Returns of Children Mutual Fund

According to the data of ICRA Analytics, the return of Children Mutual Fund has also been good in the past years. As of 31 May 2024, these funds have managed to give a return of 22.64 percent in the last one year. At the same time, the return of these mutual funds has been 14.68 percent and 12.71 percent respectively on CAGR basis in the last 3 years and 5 years.

Also Read: Union Budget 2024: Old Pension Scheme to Income Tax Relief; Things in Focus

This is how these funds work

Investors invest in children’s mutual funds as part of a plan to improve their children’s future. Investors park money in such funds with the aim of creating a fund for children’s higher education expenses and their marriage. These mutual funds usually come with a lock-in period of 5 years and they discourage withdrawals while encouraging continuous savings and investment.

Investment is increasing due to concern about education

Rise in education inflation is believed to be the biggest reason behind the increase in investment in children’s mutual funds. According to ICRA Analytics, education inflation is currently 11-12 percent, which is almost double the general inflation. It can also be understood in this way that the cost of children’s education is increasing by 11-12 percent every year. This is the reason why investors are now putting more money than before in children’s mutual funds.

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