Looking For the Top Consistent Performing Equity Oriented Balanced Funds for Child Future Planning? Here Are the Options

Looking For the Top Consistent Performing Equity Oriented Balanced Funds for Child Future Planning? Here Are the Options

Feb 17, 2018

Being a parent is a joy only a parent can feel and understand. But parenting is not all joy; with the arrival of your child in your life comes a lot of responsibilities. If you are a responsible parent, you would definitely want to make sure your child gets the best education and is able to spend a life devoid of financial constraints.

Yes, such goals are achievable but for getting such dreams fulfilled you need money. And you cannot get money without well-thought-on financial planning to meet the expenses that are going to come up at every stage of bringing your child up.

If you thought, it is good education (an expensive affair in today’s context) alone that you need to provide your child with, you were all wrong. You are also going to need to marry them off in a good way. This again will require a lot of money.

That is why every prudent parent should plan for their child’s future early on in life. The earlier they begin saving, the better it is. Now, the most important question that arises here is-which financial tool to invest in for desired results?

This question brings you to this -

Balanced Funds Equity Oriented for Child Planning -

There is no dearth of mutual fund plans these days that go in to aid children’s financial security, so that their education and other ambitions are not hampered by financial constraints.

If, because of any unfortunate reason, your child has to lead a life in your absence, she should be able to depend on your financial foresight which will make her feel financially strong to, at least, fulfill her academic goals and career dreams.

Although, there are many equity oriented balanced funds for child planning in the market, the ones enlisted in the chart below are the top performing ones. And hence, are a must if you are looking for good child investment plans.

Source: Swaraj Wealth Research

There are two plans given in the table above. They are- ‘HDFC Children Gift Fund-Investment,’ and ‘ICICI Prudential Child Care Plan Gift – Cumulative.’ While HDFC’s plan offered a 27.32% return in the year 2012, the child care plan by ICICI offered a return of 42.34%. Note that HDFC in this year ranked in the bottom quartile, while ICICI made it to the top quartile.

In the year 2013, HDFC took a slot in the top quartile by offering a return value of 12.96%. On the other hand, ICICI plummeted to the bottom quartile having its return value pegged at 2.87%. If we look at the 2014 results, we will see that a difference of 11.16% persisted between the return percentages of HDFC and ICICI, the latter with a value of 54.26% taking over the former with a 43.1% return. As a result, HDFC remained in the bottom quartile and ICICI ranked in the top quartile for the year 2014.

ICICI occupied the bottom quartile in the year 2015 with its return value pegged at 0.23%. HDFC, on the other hand, was able to find a slot in the top quartile by providing a slightly higher return of 2.44%.

Taking a look at the 2016 performance, we see that both the plans gave comparable performances. While HDFC ranked in the top quartile with a return percentage of 7.7%, ICICI continued to be in the bottom quartile with a 6.87% return.

Time for a good news- we have 2017’s performance values as well. So, by far, HDFC is leading and is in the top quartile with its return value at 22.03%. ICICI, on the other hand, is in the bottom quartile with a 16.11 return percentage.

We are not here to figure out the clear winner between these two; we are here to tell you with stats that both the plans are great performers and are the two top consistently performing equity oriented balanced funds for child investment planning.

Now, that you have got a broad idea of the plan’s performances over the years, let’s delve deeper into each of the funds to know more about them.

HDFC Children Gift Fund-Investment -

It’s an open ended dividend fund launched in the year 2001. The main aim of the plan is to generate long term capital appreciation. If you want to invest in this plan, you will have to start with a minimum sum of INR 5000. The fund also has a savings option apart from this investment scheme.

Below, you can see the scheme performance chart for the fund. While the fund offered a return of 16.69% in the first year of its launch, higher than the market average i.e. 16.28%, its performance dipped in the third year, when it became 12.25%. Interestingly, it still remained higher than the market average. In the fifth year since its inception, the fund provided a return value of 18.1% which was higher than the market mean by 1.05%. The fund’s tenth year returns were lower at 14.51, which, nevertheless, were higher than the market average which was 12.21% in that particular year. Now, if we look at the overall since-launch returns, we will see that the performance of this fund has been way higher than the return average offered by other comparable schemes in the market. So, you can say ‘yes’ to this scheme without apprehensions.

Source: Swaraj Wealth Research

You can invest in this fund by either adopting the SIP approach or taking the lumpsum route.

SIP Amount Returns

If you are interested in making an SIP investment in the HDFC children gift fund, then the following chart will help you understand what the returns would be like. For someone, who started investing on 21st of October, 2016, the profit has been around INR 12808 till 21st of September, 2017, considering they invested an amount of INR 10000 monthly throughout the term. The total invested amount i.e. 120000 becomes 132808 (the fund value) by the end of the term, offering a return of 24.21%.

Source: Swaraj Wealth Research

Lumpsum Amount Returns

Now, if you are someone who can’t invest on a regular basis, then the lumpsum approach is the best for you. If a lumpsum investor invested a sum of 100000 on 21st of October, 2016 then his till-date return percentage would be 15.88. That means he receives INR 14484 as profit on an investment of 100000 over the term, the fund value being INR 114484.

Source: Swaraj Wealth Research

ICICI Prudential Child Care Plan Gift – Cumulative -

It is an open ended dividend scheme. The prime objective of this scheme is capital appreciation. And the fund endeavours to achieve it by devising a portfolio that has around 51 to 60% of the funds invested in equity and equity related securities and about 40 to 49% in debt and money market instruments. This fund, launched in August 06, 2001 requires investors to start with a minimum investment amount of INR 5000.

Given below is the scheme’s performance report over the years. In the first year of its inception, the fund registered a return of 8.1% against 16.28% of average market return. In the third year of its launch, the fund offered a profit of 8.4%, which was lower than the average of the returns offered by other equity oriented balanced child funds in the market i.e. 11.33%. The plan’s return percentage was pegged at 16.38 in its fifth year of launch, still lower than the market average 17.05% by about 0.67%. Even though the plan’s tenth year return i.e. 10.02% was lower than the average market value of 12.21%, its overall performance over the years was impressive at 17.14% as opposed to 14.83% offered by other comparable schemes in the market.

Source: Swaraj Wealth Research

SIP Amount Returns

SIP is a great way to invest money for your child’s future. And if you started investing an amount of INR 10000 on the 21st of October, 2016 on a monthly basis then by 21st of September, 2017, you would get a total profit of INR 7777, considering that the fund value was 127777 over the term. Resultantly, you would get a return percentage of 14.48.

Source: Swaraj Wealth Research

Lumpsum Amount Returns -

Lumpsum investment is for people who can afford to invest a large sum of money at one shot. So, if you have some extra cash at hand, you can use the lumpsum approach to invest it for your child’s future. If you chose to invest a sum of INR 100000 on 21-10-2016, you would have received a profit of INR 7546 by now, considering INR 107546 to be the fund value. Ultimately, you would have got a return of 8.25%.

Source: Swaraj Wealth Research

Although, both of these equity oriented balanced funds for child planning are good in their own ways, you must choose one based on your preference and of course, your financial goals. And no matter which one out of these two you choose, its success would depend on your sincerity as an investor. If you are not that disciplined in financial matters then opting for the SIP approach would be the best bet. Nevertheless, the lumpsum approach has its own fan base too. The bottom line is that you should invest- the kind of approach you choose matters less. After all, your child’s future is in your hands; under your control. Whether you build it or break it is up to you. If you love your child and think they should have a hassle-free future, you should embark on an investment mission, today!

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