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Planning Child's Future

Invest in large- & mid-cap funds when you've a long-term horizon to invest for your child's future…

I am 32 and will become a father soon. I wish to invest Rs 4,000 a month towards my child’s education and future needs after 18 years. I have selected HDFC Children’s Gift Investment plan, HDFC Balanced and HDFC Prudence. How would you rate these funds?
- Mandar L

Schemes  Category  Rating  3-yrs ret (%)  5-yrs ret (%)
HDFC Prudence Hybrid: Equity-oriented ***** 18.53 17.6
HDFC Balanced Hybrid: Equity-oriented ***** 17.08 13.7
HDFC Children's Gift Inv Hybrid: Equity-oriented **** 17.26 12.25
Returns as on April 20, 2011 Ratings as on March 31, 2011

It is encouraging to see you take the responsibility of parenthood by saving for your child so soon. With an 18-year time frame you have many years to reach this goal and should look for large- and large- and mid-cap funds. These funds are not as conservative as the balanced funds that you have selected. While you have selected good funds with consistent performance history and track record, you are losing out on diversification in style because of all funds from the same fund house as well as the same fund category.

You should consider large-cap funds such as DSPBR Top 100 Equity or Franklin India Bluechip or large- and mid-cap funds such as HDFC Top 200 or BSL Frontline Equity. All these funds are aggressive and have a proven track record. Monitor the progress of these funds and consider moving to debt funds as you approach the year when you need the investment.

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