There is no dearth of Child Plans or Children Centric Investment Plans in India. HDFC Children's Fund was launched in 2001 and compares with those from ICICI Prudential and Tata Mutual Fund.
HDFC Children's Fund has given decent returns in the last few years. Those who have invested in the last 10 years have got a superlative return of 18 per cent, while the 5 year returns have been close to 20 per cent. This is almost double of what you would have got in the bank. In the last three years the returns from the fund has been close to 21 per cent.
Portfolio of HDFC Children's Gift Fund
The portfolio of HDFC Children's Gift Fund Comprises stocks like Motherson Sumi, Larsen and Toubro, Infosys, HDFC Bank, Sun Pharma etc. Most of the stocks cannot be described as defensives. From the portfolio one can gauge that most are economy related stocks and any sharp drop in the stock markets, could lead to a fall in the net asset value, making the investment a little risky. On the other hand should the markets rally, be rest assured that you are likely to reap the benefits and earn good money.
Exit Load of HDFC Children's Gift Fund
The Exit Load of HDFC Children's Fund is a hugely disappointing 3 per cent, if one withdraws before one year. This is not a good proposition. What this means is if you get a return of say 18 per cent, before one year and you decide to withdraw from the fund, your return would be just 15 per cent because of the exit load. This is certainly high.
Should you invest in HDFC Children's Gift Fund?
There is no doubt that the scheme has given excellent returns in the past few years. Most of this is because of the last one year rally that we have seen in stocks. It's a good idea to wait for sometime and buy the scheme, since the markets have run-up too fast and you would be buying at a very high NAV.