If you invest in equity markets, directly or through mutual funds, you are probably very pleased with the on-going broad base rally in Indian equities. Markets are on their way to reclaiming all-time highs and investors are extremely bullish and complaisant at the moment. Bull markets make investors trust every positive comment made in the market. They invest in the hope of financial gain. But often, the reverse happens, they lose. Instead of cautioning you against following the momentum, mutual fund houses are trying to grow their Assets Under Management (AUM) by taking advantage of the upbeat investors' sentiment. As usual, they are set to launch some New Fund Offers (NFOs). This happens although the Securities and Exchange Board of India (SEBI) has expressed its disappointment over mutual fund houses launching NFOs instead of merging similar schemes.

However, mutual fund houses have used a different tactic this time. They have planned to launch speciality funds—these aim to help you in fulfilling specific goals, for example, children education. The insurance industry has been launching such need-based solutions for a long time. So far, mutual funds haven't been as aggressive as insurance companies in targeting some common financial objectives of potential investors. But now it seems they are going to roll out need-based products quite often, which has been the flavour of the season.

Soon you may see these 4 NFOs on the shelf—Reliance Children Fund, SBI Children Benefit Fund, DSP Black Rock Children Gift Fund, and Mahindra Bal Vikas Yojana. The SEBI has received their draft offer letters.

 

Now the question is should you invest in them?
Well, it's natural to be concerned about your child's future, but it's certainly not to believe that a "child benefit plan" is the ultimate solution to funding your child's education and satisfying other financial needs. These equity-oriented funds focusing on childcare are presented as specialised solutions but at the core are nothing more than diversified equity schemes with some added features.

PersonalFN is of the view that, you need not invest in them for two reasons. First, they have no track record and the second reason is you can manage your money more efficiently without them.

PersonalFN believes investing merely in speciality funds doesn't help fulfil objectives. Same is true in the case of children benefit funds. In principle, those who have a longer time horizon and moderate - high risk appetite may look at equity-oriented balanced funds instead of locking money in debt-oriented children benefit funds. PersonalFN believes, avoid getting carried away with the name of the fund and instead chalk out your financial plan and maintain your asset allocation. Plain diversified equity funds would also suffice in your objective of providing the best to your children. If you're looking at professional and unbiased guidance to select winning mutual fund schemes for your portfolio and plan for your child's future needs – be it education and/or marriage, PersonalFN's unbiased mutual fund research and financial planning service can be the answer.

Add Comments