How Have Children’s Mutual Funds Grown by 21% in 5 Years?
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Synopsis
The surge in children’s mutual funds highlights the financial strategies parents are adopting to secure their children’s educational future amidst rising costs. This article delves into the impressive growth figures and the factors driving this trend.
Key Takeaways
- The Children’s mutual fund category has grown by 21.08% in the last five years.
- AUM increased from Rs 9,866 crore to Rs 25,675 crore.
- Average CAGR for top funds ranges from 15-20%.
- Parents prefer these funds for better returns compared to fixed deposits.
- Strong growth outlook supported by rising education costs and investor preferences.
New Delhi, Dec 15 (NationPress) The Children’s mutual fund segment has witnessed remarkable growth of approximately 21.08% over the past five years, and projections indicate that it will continue to experience double-digit growth in the forthcoming years, as highlighted in a report released on Monday.
The analysis from ICRA Analytics attributes this growth to the escalating costs of education, which have been rising at an annual rate of 11–12%. Additionally, the enhanced returns offered by these funds are encouraging parents to explore market-linked instruments for long-term financial planning.
The assets under management (AUM) in children's mutual funds surged by 160% over five years, reaching Rs 25,675 crore in November 2025, a significant increase from Rs 9,866 crore five years earlier.
The total number of folios increased to approximately 32 lakhs in November 2025, up from roughly 29 lakhs five years ago.
Currently, there are 12 such funds available in the market, with the top-performing funds generating an average CAGR of 15-20% over the last three to five years.
The leading fund in this category achieved a return of 34.35% over five years, 22.85% over three years, and 10.89% in the last year.
According to Ashwini Kumar, Senior Vice President and Head of Market Data at ICRA Analytics, "Parents are increasingly opting for these funds as they blend equity and debt exposure, providing better returns compared to traditional savings options like fixed deposits, and implement a lock-in period of five years or until the child reaches 18, thereby promoting long-term savings."
"The growth outlook for the Children’s Mutual Fund category in India is exceptionally bright, bolstered by robust historical performance and changing investor preferences," Kumar added.
The average returns were approximately 4% for one year, 14% for three years, and 17% for five years.
Investors anticipate the mutual fund sector to expand at a 10–18% CAGR through 2033, while this category is expected to evolve into a mainstream option for goal-oriented investing, offering disciplined savings, tax incentives, and superior returns compared to traditional methods, as per the report.
Increased financial literacy, digital penetration, and regulatory backing for solution-oriented schemes are expected to further enhance adoption.
Point of View
I believe the growth of children’s mutual funds is a reflection of the evolving financial landscape in India. Parents are increasingly recognizing the importance of investing for their children’s futures, particularly in light of rising education costs. This trend is not only beneficial for individual families but also signifies a broader shift towards more informed and strategic financial planning in our society.
NationPress
15/12/2025
Frequently Asked Questions
What are children’s mutual funds?
Children’s mutual funds are investment schemes designed specifically for the financial needs of children, helping parents save for future expenses like education.
How do I invest in children’s mutual funds?
Investing in children’s mutual funds can be done through financial institutions or online platforms that offer mutual fund services.
What are the benefits of children’s mutual funds?
They provide potential higher returns, tax benefits, and help in long-term financial planning with a lock-in period.
