The fund house believes that such kind of solution-oriented schemes with lock-in allows investors to stay invested in the scheme for a longer horizon and gain the benefits of long-term wealth creation.
SBI Mutual Fund on Monday announced the launch of SBI Magnum Children’s Benefit Fund – Investment Plan. The investment plan is a new offering as part of SBI Magnum Children’s Benefit Fund, which is a predominantly debt-oriented offering.
The fund house believes that such kind of solution-oriented schemes with lock-in allows investors to stay invested in the scheme for a longer horizon and gain the benefits of long-term wealth creation. “I think this kind of products gives a lot of discipline to remain invested for longer time frame. In this scheme, the fund manager has an option to move from 65% of the equity to 100% depending on various market scenarios and try to optimise the returns over the period of time,” said Navneet Munot, chief investment officer at SBI Mutual Fund.
The scheme has a lock-in for at least five years or till the child attains the age of majority whichever is earlier. This scheme will predominantly invest in equity & equity-related instruments including equity ETFs with a minimum of 65% going up to 100%, debt including debt ETFs and money market instruments up to a maximum of 35% in Reits & InvITs up to 10% and up to 20% in gold ETFs.
Currently, there are children plans offered by fund houses such as HDFC MF and UTI MF. The SBI Magnum Children’s Benefit Fund-Saving Plan has given the returns of 7.48% in the last one year, showed the data from Value Research. In the seven-year and 10-year period the fund has managed to give returns of 13.68% and 10.25%, respectively.
D P Singh, chief business officer at SBI Mutual Fund, said, “I believe, children-oriented mutual funds are a compelling solution for parents to save for their children’s future as it helps create a separate ‘bucket’ in which they invest only for their child. Such a segregation in their investment can alert them to not dip into and withdraw from this corpus for an impulsive or short-term need.”