Investors in the equity markets are expected to see a slew of equity oriented schemes targeted to meet children’s long term funding needs. Investors in the equity markets China wholesale electric tap are expected to see a slew of equity oriented schemes targeted to meet children’s long term funding needs. Atleast four fund houses have filed a draft offer letter with the Securities and Exchange Board of India (Sebi) over the past one-year seeking the regulator’s approval to launch children specific plans. They include Reliance Children Fund, SBI Children Benefit Fund, DSP Black Rock Children Gift Fund and Mahindra Mutual Fund’s Bal Vikas Yojana.

The main objective of the scheme as mentioned in the offer letter is to generate long-term capital appreciation and income by investing predominantly in equity & equity related instruments and balance in debt and money market instruments to help the investor in achieving the financial goals for the children. “We already have a debt oriented scheme focussed on children. Since equity is the flavour of the season, we expect our new scheme to gain significant traction among investors,” said Dinesh Khara, managing director, SBI Mutual Fund. While child plans are almost similar to other equity oriented schemes in terms of the investment philosophy, one major advantage of child plans according to Mr Khara would be the way an investor perceive this scheme. “Investors would hold this scheme with a slightly longer time horizon which would be closely aligned with their child’s financial goals.

The financial goals could be anything like paying higher education fees or to meet marriage expenses. The tendency to withdraw funds from such schemes to meet other financial requirements would be less,” said Mr Khara adding that investors could choose a systematic investment plan (SIP) route or a lump sum investment according to their ability. According to DSP BlackRock Mutual Fund, units in the scheme should be held in the name of beneficiary child, who must be less than eighteen years on the date of investment. The investment plan will have sub plans like ‘compulsory lock-in’ and ‘no lock-in’. “Investment will be locked-in till the unitholder (being the beneficiary child) is 18 years of age. Investment may be redeemed after the unitholder is 18 years of age or 3 years from the date of allotment, whichever is later,” DSP BlackRock MF said in its offer letter.