List of Best Children’s Mutual Funds in India for 2025
Children’s mutual funds help parents invest strategically in their child’s future and financial security. These kids investment funds build wealth over time to support major goals like education or business start-ups. When parents invest in a children’s fund, they encourage financial planning habits in their kids early, helping them create a stable and secure future.
Top Children’s Funds in India
Here are the top children’s funds in India sorted according to their 5Y CAGR:
| Name | AUM (Rs. in cr.) | 3Y CAGR (%) | 5Y CAGR (%) | Expense Ratio (%) |
|---|---|---|---|---|
| Tata Young Citizen Fund | 349.20 | 12.15 | 16.66 | 1.90 |
| ICICI Pru Child Care Fund-Gift Plan | 1,280.20 | 15.07 | 15.08 | 1.49 |
| SBI Magnum Children's Benefit Fund-Savings Plan | 121.17 | 11.29 | 13.15 | 0.85 |
| Axis Children's Fund-No Lock in | 868.75 | 7.34 | 11.74 | 1.26 |
| Aditya Birla SL Bal Bhavishya Yojna | 1,031.92 | 11.39 | 11.68 | 0.94 |
| Axis Children's Fund-Compulsory Lock in | 868.75 | 7.12 | 11.54 | 1.26 |
| LIC MF Children’s Fund | 16.10 | 9.81 | 11.27 | 1.68 |
| SBI Magnum Children's Benefit Fund-Investment Plan | 3,124.02 | 19.80 | 0.00 | 0.81 |
| Baroda BNP Paribas Children's Fund | 68.79 | 0.00 | 0.00 | 0.33 |
| Union Children's Fund | 60.05 | 0.00 | 0.00 | 0.86 |
Disclaimer: Please note that the above table is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing. The data is derived from Tickertape Stock Screener and is subject to real-time updates.
Note: The list of top children’s funds is derived from Tickertape Mutual Fund Screener, and the data is derived from 18th February 2025. The parameters used to curate the list are as follows:
- Plan: Growth
- Category: Solution Oriented – Children’s Fund
- CAGR 5Y: Sorted from Highest to Lowest
Pro Tip: You can use Tickertape’s Stock Screener to research and evaluate stocks with over 200+ filters and parameters.
Overview of the Top Children’s Funds in India
Children’s Benefit Fund-Investment Plan
The SBI Magnum Children’s Benefit Fund-Investment Plan helps parents invest for their child’s future educational and other financial needs. It offers a mix of equity and debt investments, balancing growth with safety.
ICICI Pru Children’s Fund
ICICI Prudential Children’s Fund is designed to create wealth for a child’s future by investing in a diversified portfolio of equity, debt, and money market instruments. It focuses on long-term growth and financial security.
Tata Children’s Fund
Tata Children’s Fund aims to accumulate wealth for a child’s future needs like education and marriage. The fund invests across equity and debt markets, ensuring a balanced approach to risk and return for long-term growth.
Aditya Birla SL Bal Bhavishya Yojna
Aditya Birla Sun Life Bal Bhavishya Yojna is a child goal-based fund that seeks long-term capital appreciation. It invests in equity and debt securities, helping parents create a financial cushion for their child’s future.
Axis Children’s Fund-No Lock in
Axis Children’s Fund-No Lock-in offers flexibility for parents without a compulsory lock-in period. By investing in both equity and debt instruments it allows for long-term growth while securing funds for children’s future needs.
Axis Children’s Fund-Compulsory Lock in
Axis Children’s Fund-Compulsory Lock in helps build wealth for a child’s future financial needs by locking in investments for a specified period. It invests in equity and debt securities to achieve long-term growth and financial security.
SBI Magnum Children’s Benefit Fund-Savings Plan
The SBI Magnum Children’s Benefit Fund-Savings Plan is ideal for generating both regular income and capital appreciation for your child’s future. It balances equity and fixed-income investments to provide long-term growth and stability.
LIC MF Children’s Fund
LIC MF Children’s Fund is designed to accumulate wealth for a child’s future educational and other financial needs. The fund invests in a combination of equity and debt securities to generate growth while minimising risks.
UTI Children’s Hybrid Fund-Scholarship-Direct Plan
The UTI Children’s Hybrid Fund-Scholarship-Direct Plan offers a balanced investment strategy, combining equity and debt instruments. This direct plan aims to support a child’s future financial needs, particularly for education, with a risk-conscious approach.
UTI Children’s Hybrid Fund
UTI Children’s Hybrid Fund invests in a mix of equity and debt instruments, focusing on long-term capital appreciation and stability. It is designed to help parents save for their child’s future educational and personal needs.
What is a Children’s Fund?
A Children’s Fund is a mutual fund designed to help parents meet child-related financial goals. It uses a solution-based approach to manage the rising costs of education and other needs. These funds invest in a combination of equities and debts so investors can choose based on their risk level and investment duration.
Children’s Funds come with a minimum lock-in period of five years, which can continue until the child becomes an adult. This structure encourages long-term investment by preventing early withdrawals until maturity. It helps investors stay protected from market ups and downs and earn better returns by holding their investments during fluctuations instead of selling during market declines.
How do Children’s Funds Work?
Children’s funds work by offering personalised investment options to match specific financial goals. Child Fund India invests in both equity and debt portfolios. Investors choose their preferred mix based on their risk appetite and investment horizon. These funds require a minimum lock-in period of 5 years, and this can extend until the child becomes an adult. Investors cannot withdraw the money before maturity, which promotes long-term commitments. Early redemption attracts high penalties of 3% to 4% in India, motivating investors to remain invested for longer. Extended investment periods help funds earn higher interest and reduce volatility risks for investors.
Purpose of Children’s Funds
A children’s mutual fund helps parents create financial resources for expenses such as higher education, boarding and relocation. These funds maintain a secure portfolio and give assured returns on investments.
Parents can choose a lock-in period that suits their needs. It can range from 5 years to the child’s 18th birthday. This flexibility makes children’s mutual funds a practical long-term investment option with specific terms and conditions.
Children’s mutual funds use a hybrid portfolio of debt and equity instruments. This approach offers attractive returns and reduces risks.
In India, a high exit penalty discourages early withdrawals and helps the funds earn more interest over time. Fund houses usually charge a 4% penalty if investors withdraw before completing the minimum 5-year lock-in period.
Features of Children’s Funds
Here are the main features to consider before investing in a children’s fund.
- Investment Objective: Children’s Funds aim to offer a stable way to achieve long-term capital growth. Debt-focused funds provide steady returns with low risk, while equity-linked funds deliver higher returns over time despite short-term fluctuations.
- Lock-in Period: These funds have a lock-in period of at least 5 years or until the child turns 18, whichever happens first.
- Exit Load and Expense Ratio: Investors must check the annual expense ratio and exit load that apply when redeeming the investment.
- Documentation Requirements: In addition to standard mutual fund documents, investors must submit proof of the child’s age, proof of relationship, and other necessary documents.
Factors to Consider Before Investing in Children’s Funds
Investing in children’s mutual funds helps secure your child’s future through structured financial planning. Consider the following factors before you invest.
- Investment Objective: Decide the purpose of your investment, such as funding your child’s education, marriage, or future financial security.
- Risk Appetite: Evaluate your risk tolerance and pick funds that fit your comfort level. Children’s funds come with different risk levels, so match the fund to your risk profile.
- Fund Performance: Check the fund’s historical performance and look for consistent returns over various time periods. Consistency helps you assess the fund’s stability and growth potential.
- Expense Ratio: Review the fund’s expense ratio, which shows the yearly fee charged by the mutual fund company. Lower expense ratios usually result in higher returns for investors.
- Investment Horizon: Decide your investment period carefully. Children’s mutual funds work best for long-term goals, so align them with your timeline.
- Fund Manager’s Track Record: Study the fund manager’s background and past results in managing similar funds. A skilled manager can positively influence performance.
- Portfolio Diversification: Choose a fund that offers a diversified portfolio across various asset classes. Diversification reduces risk and provides better stability during market ups and downs.
- Exit Strategy: Understand how you can redeem your investment and whether any penalties apply. Keep a clear exit plan that matches your financial goals.
How to Invest in Children’s Funds?
You can easily start to invest in childern’s funds by following these steps:
- To invest in the best mutual funds for children, you can visit a mutual fund investment platform such as smallcase.
- The next step is to research and identify the children’s mutual funds that match your financial goals. Tools like the Tickertape Mutual Fund Screener can help you filter and compare funds based on parameters such as returns, expense ratio, and fund size.
- Once you shortlist the funds, visit smallcase, log in, and search for the fund by name. You can then choose the investment mode and complete the process.
How do Children’s Funds Generate Returns?
Children’s funds generate returns by investing in a diverse mix of stocks, bonds, and other securities. Fund managers choose investments that match the fund’s goal of long-term growth or income generation. They spread these investments across different sectors to reduce risk and seize market opportunities.
- Equity Investments: A large portion of children’s funds goes into equities that offer high return potential. Fund managers pick these stocks for their growth prospects and stability.
- Fixed-Income Securities: Children’s funds also invest in bonds and other fixed-income instruments to offset the higher risk of equities. These investments provide regular interest income and keep the portfolio stable.
- Dividend Reinvestment: Many children’s funds reinvest dividends from their equity holdings to help compound returns over time.
- Market Analysis and Strategy: Fund managers study market trends and actively adjust strategies to improve returns and manage risk.
Children’s Fund Investment Benefits
Children’s Funds offer several benefits, including:
- Tailored Investment for Child’s Future: Children’s Fund provide a tailored investment option for parents or guardians to secure their child’s future.
- Choice of Debt or Equity-Based Schemes: These funds are available in both debt-based and equity-based schemes, allowing investors to make informed decisions about the type of fund they choose.
- Tax Benefits and Indexation Advantage: Investors enjoy tax benefits and the advantage of indexation, reducing the taxable amount.
- Peace of Mind for Parents: Parents can feel reassured about their child’s future, knowing there will be sufficient financial support to meet their goals.
- Additional Tax Benefits for Parents of Children with Disabilities: Parents of children with disabilities receive an additional tax benefit on the children’s fund, including an annual exemption of ₹1500 per child on interest income.
Risks of Investing in Children’s Funds
Children’s Funds focus on long-term investments, allocating assets in equity and debt based on the chosen scheme. Childrens fund don’t guarantee returns and are influenced by market conditions. Their equity exposure makes them moderately to highly risky, so consider this when adding them to your portfolio.
Children’s Fund vs Sukanya Samriddhi Yojana
Here is a table of comparison between children’s funds and Sukanya Samriddhi Yojana Scheme:
| Feature | Children’s Fund | Sukanya Samriddhi Yojana (SSY) |
| Investment Type | Mutual Funds (Equity, Debt, Hybrid) | Government Savings Scheme |
| Target Audience | Parents/guardians investing for children’s future | Parents/guardians investing for a girl child |
| Tax Benefits | Section 80C for ELSS, Tax on long-term and short-term capital gains | Exempt from tax under Section 80C, Interest earned and maturity proceeds are tax-free |
| Investment Tenure | Flexible (typically long-term) | Minimum 21 years or until the girl turns 21 |
| Risk | Market-linked risk, depends on the type of fund | Low risk, as it’s backed by the government |
| Returns | Market-dependent (varies by fund type) | 7.6% p.a. (subject to change by government) |
| Lock-in Period | Varies by fund type (equity funds may have lock-in) | 21 years or until the girl turns 21 |
| Withdrawal Flexibility | Withdrawals allowed based on fund rules | Partial withdrawals allowed after the girl turns 18 |
| Minimum Investment | Varies by fund (can start with as low as ₹500) | ₹250 per year (mandatory) |
| Maximum Investment | No upper limit, based on investor’s preference | ₹1.5 lakh per year |
| Maturity Amount | Depends on market returns | Tax-free at maturity, provides guaranteed returns |
Taxability of Childrens Fund
The taxability of children’s mutual funds depends on the type of fund and the holding period. Below is a summary of how long-term and short-term capital gains, as well as dividends, are taxed for different types of funds.
| Type of Fund | Tax on Long-Term Capital Gains (LTCG) | Tax on Short-Term Capital Gains (STCG) | Dividend Tax |
| Equity-Oriented Funds | 10% tax on gains exceeding ₹1 lakh in a year | 15% tax on gains if held for less than 1 year | Taxed as per the investor’s income slab |
| Debt-Oriented Funds | 20% tax with indexation on gains held for more than 3 years | Added to income and taxed as per income tax slab | Taxed as per the investor’s income slab |
| Hybrid Funds | 10% tax on equity exposure > 65% for LTCG, taxed like equity funds | Taxed like debt or equity funds based on exposure | Taxed as per the investor’s income slab |
Exit Load on Children’s Fund in India
When choosing a mutual fund for your children, it’s crucial to consider the associated exit load. Mutual fund companies often impose high exit loads or penalties to encourage long-term investments, aiming to retain parents as customers for extended periods.
Previously, mutual funds included entry loads, but after their ban, fund houses typically charge around a 1% exit load for redemptions made within the first year. For child mutual fund plans, the exit load can reach up to 4%, and investors may need to stay invested for a minimum of five years. Some plans even charge an exit load if the investor redeems the fund after seven years.
These exit loads promote long-term investment, enabling investors to see significant growth in their funds, potentially.
To Wrap It Up…
Financial challenges can make saving for a child’s future difficult. Yet, even small monthly SIPs can make a big difference. Investing in child education funds ensures access to good education and reduces financial stress for parents, giving children a better quality of life.
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Frequently Asked Questions(FAQs) on Children’s Funds
A Children’s Fund is a mutual fund designed to meet child-related financial goals. It provides a solution-focused way to manage rising education and living costs. These funds invest in a mix of equity and debt instruments, allowing investors to choose based on their risk level and time horizon. This makes them suitable for long-term investments for kids.
The minimum duration is usually 5 years or until the child turns 18, whichever happens first. This duration helps the investment grow steadily over time through child-focused mutual fund schemes.
Children’s Funds provide a practical way to handle increasing education and other essential expenses. They help investors secure long-term growth by preventing early withdrawals and make an effective option for education savings mutual fund.
Children’s mutual funds require investors to stay invested until the plan matures. This feature encourages disciplined saving for child-focused goals and offers some protection against market fluctuations.
Investing in a Children’s Fund provides tax benefits with deductions up to ₹1.5 lakhs under Section 80C of the Income Tax Act 1961. Maturity gains are taxable. For equity funds, gains above ₹1 lakh in a financial year are taxed at 10%. For debt funds, capital gains are taxed at 20% with indexation. These funds also give additional benefits for children’s fund investments.
