After Unit Trust of India, Kothari Pioneer, IDBI Principal, HDFC and Tata Funds, it's the turn of LIC Mutual Fund to launch a child specific Fund. The fund has filed the draft offer letter with the Securities and Exchange Board of India and is yet to finalise the date for the launch. The proposed scheme will be an open-ended balanced scheme, striving to provide long-term growth with a judicious mix of investments in debt and equity instruments. At present, child benefit schemes have a pre-dominant debt exposure.
The LIC fund proposes to provide a free accident insurance cover up to 10 times the face value of units held by the beneficiaries, but with a maximum cap of Rs three lakh. The scheme will have a lock-in period of three years or after the beneficiary turns 18 i.e. attains maturity, whichever is later. The prospective investors ought to have a long-term commitment before entering the scheme, as the AMC plans to charge a 5% load if exit is effected after three years of investment but before the beneficiary attains maturity. Also the prospective sales of units after the initial offer period will carry an entry load of 1%.
The investors will have no choice except to invest through a growth plan with a systematic investment and withdrawal options attached to it.
LIC Mutual Fund currently has over a decade of operations and has launched 32 varied schemes. Of these 32, 20 are in existence while the remaining 12 funds have been redeemed. Together the 20 schemes manage net assets worth Rs 1414 crore as on March 31, 2001.
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