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HDFC Children's Gift Fund

Aabhas Pandya

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 fund is open for initial offer 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.

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 unitholder may redeem units at a net asset value (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.

HDFC Children's Gift Fund

Type	open-ended
Category	Balanced fund
Face Value	Rs 10
Minimum Investment	Rs 3000
Issue Open Date	January 25, 2001
Issue Close Date	February 9, 2001
Repurchase	After the child attains 18 years of age

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 per cent of the corpus, while equity instruments would normally account for 20 per cent 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 the emphasis is on capital preservation.

Investment Plan

On the other hand, the 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 the long term, investors with a similar horizon should consider this option.

The added advantage

In addition, the fund offers Personal Accident Insurance to resident unitholders. The insurance cover available is about 10 times the face value of units held subject to a maximum of Rs 300,000. Thus, with an investment of only Rs 30,000, you can avail the maximum available insurance cover.

The options

Investors today have few open-ended options, which offer a savings-avenue that are 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 Kothari Pioneer Children Asset Plan has entirely dedicated its investments to debt instruments.

The asset management company

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.

Money

Fund IPO

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