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HDFC Children's Gift Fund


HDFC Asset Management is expanding its fund family with the launch of HDFC Children's Gift Fund. An open-ended balanced fund, it aims at building a sizeable asset base for meeting children's education expenses. With a minimum amount of Rs 3000, investments can be made in favour of the children below 18 years of age. The initial offer has been extended till February 9, 2001. Investments in the fund entail a lock-in of three years or when the unitholder attains 18 years of age, whichever is later.

Planning for your child's future Saving for your children's future is as important as dreaming for them. Apart from the growing avenues for higher education, the costs of these options have been steadily increasing. Surely, by the time your child wants to take up the course or degree of his choice, paying for it should not be a deterrent. Hence, it is imperative that you start building a sizeable nest egg for the future with regular investments. The scheme offers systematic investment with a minimum investment of Rs 1000. The table presents the estimated cost of higher.

Investment Details Investments in the nature of gift can be made in favour of children below 18 years of age. After the lock in, a unit holder may redeem units at a NAV related price, or transfer the units in favour of a person less than 18 years of age. On redemption, the amount would accrue to the unitholders and would not be clubbed with the parent's income. Pre-mature redemption under exceptional circumstances is permitted.

The Plans – Saving and Investment Depending on your investment horizon, the fund offers two flexible plans – Savings and Investment.

Savings Plan This option lays emphasis on steady returns with lower risk. Thus, the scheme would take a predominant exposure to debt and money market instruments at 80% of the corpus, while equity instruments would normally account for 20% of the corpus. With this allocation, the plan is likely to be managed as a conservative balanced fund. The plan is suitable for a teenage child, where investments face a smaller lock-in and emphasis is on capital preservation.

Investment Plan On the other hand, Investment Plan would be invested primarily in equity instruments with the flexibility to invest in both debt and equity markets in the 40-60 range. With its typical balanced fund character, the fund is likely to be more volatile than the savings option. For instance, parents seeking investment for their newborn face a longer lock in of 18 years. With equities being the best investment-avenue for long-term, investors with a similar horizon should consider this option.

The Added advantage In addition, the fund offers Personal Accidental Insurance to resident unitholders. The insurance cover available is about 10 times the face value of units held subject to a maximum of Rs 3 lakh. Thus, with an investment of only Rs 30,000, your can avail the maximum available insurance cover.

The options Investors today have few open-ended options, which offer a savings-avenue specially designed to cater to your toddler's future needs. An open-ended balanced fund, Tata Young Citizens has struck a balance between debt and equity instruments, while KP Children Asset Plan has entirely dedicated its investments to debt instruments.

The AMC HDFC Children's Gift Fund is the fifth product off the shelf from HDFC Mutual Fund, a relatively new entrant in the sector. However, in short period, the AMC has positioned itself as a conservative investment manager and has seen a rapid expansion in its asset base. With a well- designed product to suit your time horizon and with services in line with the best in the industry, HDFC Children's Gift Fund seems a good investment anchor for your child's future.

HDFC Children's Gift Fund
  Type   Open -ended
  Category Balanced Fund
  Face Value Rs 10
  Issue Open Date "January 25, 2001"
  Issue Close Date "February 9, 2001"
  Minimum Investment  Rs 3000
  Repurchase After the child attains 18 years of age
 



Escalating cost of higher education
    1990  2000  2010  2020
  Engineering 1 lakh 3.2 lakhs 8.3 lakhs 21.5 lakhs
  Medicine 0.5 lakh 5 lakhs 12.9 lakhs 33.6 lakhs
  MBA 0.3 lakh 2.4 lakhs 6.2 lakhs 16.2 lakhs
 



Options
    Redemption  Launch Date  Return since launch
  Children Gift Growth Fund '86 After 21 years of age April-86 Assured div of of 12.5 % pa and bonus every five years
  Kothari Pioneer Children's Asset Plan - Gift After 18 years of age June-98 11.45 *
  Tata Young Citizens After 18 years of age October-95 14.30 *
 
* as on December 2000