Children’s mutual fund AUM surge 142% in last 5 years to Rs 20,081 crore in May

The total assets under management (AUM) of children’s mutual funds, a solution-oriented category, witnessed a nearly 142% surge in the last five years to touch Rs 20,081.35 crore in May. The AUM was Rs 8,285.59 crore in May 2019. On a year-on-year basis, the AUM has increased by nearly 31% from Rs 15,375.40 crore in May 2023.

The children’s mutual fund category as of May 2024 gave an average return of 22.64%, 14.68%, and 12.71% in the last one, three, and five years respectively, according to a report by ICRA Analytics.

The report mentioned that these returns are significantly higher as compared to fixed deposits (as per State Bank of India), which on average gave 6.80%, 6.75%, and 6.50% returns over the same time period.

The net flows into children’s mutual funds witnessed a growth of 28%, 102%, and 23% over a one, three, and five-year period.

According to Ashwini Kumar, Senior Vice President and Head of Market Data, at ICRA Analytics, the surge in education inflation, which is estimated at close to 11-12% (almost twice the country’s inflation rate), is encouraging an increasingly large number of parents to look for suitable investment avenues to fund their children’s education. The attractive rate of returns coupled with the growing awareness among parents regarding mutual fund investments is contributing to a surge in AUM of these funds.