Invest in Your Child’s Dreams with Baroda BNP Paribas Children's Fund

Baroda BNP Paribas Mutual Fund has launched Baroda BNP Paribas Children's Fund, it is an open-ended equity scheme for investment for children having a lock-in of at least 5 years or till the child attains age of maturity (whichever is earlier).

In today's economic environment, securing a child's future amidst rising education costs has become a paramount concern for many parents. With education inflation consistently outpacing general inflation, parents are increasingly seeking effective investment strategies to fund their child's academic and career aspirations.

[Read: Here's How You Can Invest in Mutual Funds for Your Child's Overseas Education]

Newly launched, Baroda BNP Paribas Children's Fund is a targeted investment vehicle that aims to shield investments from the impact of inflation by focusing on high-potential returns through equity-oriented investments. Parents looking to secure their child's future, may find this offering a disciplined approach to investing that aligns with their long-term financial planning goals.

By investing in this fund, parents may benefit from a structured approach to wealth accumulation, ensuring that their child's educational expenses are not compromised by inflation and are met with financial stability.

Details of Baroda BNP Paribas Children's Fund:

What will be the investment strategy for Baroda BNP Paribas Children's Fund?

Baroda BNP Paribas Children's Fund is actively managed and strategically designed to help accumulate wealth over the long term, specially targeting significant milestones such as education or other future needs of children.

The scheme intends to follow a top down approach for selecting sectors and bottom up approach while selecting stocks. Following are the factors to be considered while constructing the portfolio:

• Quality of business model

• Quality of management

• Business and economic fundamentals driven by in-depth research

• Reputation and track record of management

• Long term growth prospects

• Financial strength of the company

• Sustainable competitive advantage

This scheme incorporates a lock-in period of at least five years or until the child reaches adulthood, whichever comes first. This feature is crucial as it discourages impulsive withdrawals, fostering a disciplined saving culture among parents.

(Source: Baroda BNP Paribas Children's Fund - PPT)

As you can see, equity is the only asset class, that has historically beaten education inflation in the long term. This scheme is not just an investment; it's a commitment to nurturing your child's potential by aiming to provide the financial support necessary for education, extracurricular activities, and life's important events.

Goal-based investing is a strategic approach that aligns investment decisions with specific life goals, promoting financial discipline and clarity. Baroda BNP Paribas Children's Fund is specially designed for children under 18, ensuring their future needs are prioritized. The fund will construct a well-diversified portfolio without any sector or market cap bias.

How will the scheme allocate its assets?

Under normal circumstances, Baroda BNP Paribas Children's Fund will hold an allocation of 80% to 100% in equity & equity related instruments, 0% to 20% in Debt and Money Market Instruments and 0% to 10% in Units issued by REITs and InvITs.

Should investments in Baroda BNP Paribas Children's Fund be considered?

Baroda BNP Paribas Children's Fund is a solution-oriented scheme designed to help parents accumulate wealth for their child's future , such as education or other major milestones. The fund emphasizes growth through a balanced portfolio approach, blending equity for capital appreciation and debt instruments for stability.

As such the investment strategies are tailored to align with these objectives, shaping the risk & return profiles accordingly. The Baroda BNP Paribas Children's Fund's mandatory 5 year lock-in period allows investors to stay invested for longer period, leading to greater compounding of potential returns, enabling substantial wealth accumulation over time.

With education inflation averaging 11% annually, this fund could help bridge the financial gap effectively when combined with the power of compounding. While this fund provides an opportunity for wealth creation, it comes with associated risks due to its high exposure to equities, making it susceptible to market volatility.

It is ideal for investors with a long-term investment horizon and the ability to withstand short-term fluctuations. Parents seeking inflation-adjusted growth to meet rising education costs may find this fund a suitable option, but they should ensure it aligns with their financial goals and risk tolerance.