Children’s MF AUM surge 142% over 5 years, rises 31% YoY: ICRA Analytics

Assets Under Management of children’s mutual funds saw a 142 percent rise over the last five years, stated ICRA Analytics.

The AUM touched Rs 20,081.35 crore in May 2024 from Rs 8,285.59 crore in May 2019. On a year-on-year basis, the AUM increased by nearly 31 percent from Rs 15,375.40 crore in May 2023.

ICRA Analytics noted, “Attractive rate of returns coupled with the growing awareness among parents regarding mutual fund as investment vehicle to meet their life goal has contributed to surge in AUM of these funds.”

Children’s mutual fund as on May 31, 2024, has seen a category average CAGR return of 22.64 percent, 14.68 percent, and 12.71 percent over one-year, three-year, and five-year periods, respectively, according to the analysts. Thse returns are “significantly higher” than fixed deposits (as per State Bank of India), which on an average gave 6.80 percent, 6.75 percent and 6.50 percent returns over one-year, three-year, and five-year periods.

Ashwini Kumar, Senior Vice President and Head Market Data, ICRA Analytics, said, “The surge in education inflation, which is estimated at close to 11-12 percent (almost twice the country’s inflation rate), is encouraging an increasingly large number of parents to look for suitable investment avenues to fund their children’s education. The attractive rate of returns coupled with growing awareness among parents regarding mutual fund investments is contributing to a surge in AUM of these funds.”

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The net flows into children’s mutual funds witnessed a growth of 28 percent, 102 percent, and 23 percent over one-year, three-year, and five-year periods. The number of folios has increased by around 4 percent at 29.93 lakh folios as of May 2024, as against 28.83 lakh in May 2019.

The press statement from ICRA Analytics noted that there are around eight children’s mutual funds available in the market at present. Of them, the AUM of HDFC Children’s Gift Fund is among the highest, accounting for nearly 52 percent of the total AUM of children’s mutual funds at Rs 9,018.60 crore as on May 2024.

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UTI Children’s Hybrid Fund accounts for around 25 percent at Rs. 4,433.81 crore; SBI Magnum Children’s Benefit Fund Investment Plan — Red – Growth — accounts for 12 percent at Rs 2,023.42 crore and UTI Children’s Equity Fund at around 6 percent at Rs. 1,010.49 crore. The AUM of Axis Children’s Gift Fund — Lock in Registered Growth was at Rs 822.90 crore; SBI Magnum Children’s Benefit Fund – Savings Plan at Rs. 110.77 crore; Union Children’s Fund – Reg – Growth at Rs 46.70 crore and the AUM of LIC MF Children’s Fund stood at Rs 15.70 crore as on May 2024.