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HDFC Children Gift Investment Plan
If you are looking to build wealth for your child's future, HDFC Children's Gift fund – Investment Plan is a good option. With a sound track record, this equity-oriented balanced fund has outperformed the average returns of pure equity funds over three and five-year periods. The fund can hold about a fourth of its assets in debt. It has used this mandate to effectively contain declines better than pure equity funds.
HDFC Children's Gift delivered 17 per cent compounded annually in the last three years, beating peer funds from the same stable – HDFC Prudence and HDFC Balanced.
Suitability
This fund is suitable for investors looking to build a long-term kitty (at least five years) for their child. Investments can be made only in the name of a minor child
Within the investment plan there are two options: one, you can hold the fund and withdraw anytime, subject to exit load. Another option locks the investment for up to three years or when the minor turns 18, whichever is later. If you go for the latter, ensure that you stop SIPs at least three years before your goal date as each SIP will be subject to lock-in.
Opt for investments through the SIP route. Over the last five years, an SIP in the fund would have delivered a good 17 per cent internal rate of return.
Performance
HDFC Children's Gift outperformed top peers HDFC Prudence, HDFC Balanced and Reliance Regular Savings in the last three years by a good 2-7 percentage points. Its five-year return, though, lagged these peers by 1-2 percentage points. Lower mid-cap exposure compared with peers and adherence to a maximum of 75 per cent equity exposure (while some peers go up to 80 per cent) meant that its participation in such rallies is a bit capped. But its average returns (on a rolling basis) stood better at 15 per cent a year over the above period, suggesting that the point-to-point returns is influenced by market conditions.
In the last one year too, it could not beat its index only because the index has a 40 per cent weight to debt (as against 20 per cent by the fund now). Debt as a category has done well in the current high interest scenario.
Portfolio
HDFC Children's Gift has one half of its equities in large-cap stocks of over Rs 10,000 crore market cap. VST Industries, FAG Bearings and Eclerx services are some of the stocks in the mid-cap space that have delivered well for the fund in the past one year.
Stocks from the pharma, banking and FMCG sectors account for over a third of the assets while the rest are in sectors including software, industrial products and auto ancillaries.
Most of the fund's holdings in debt are in triple-A rated instruments issued by private players such as HDFC and ICICI Bank and public sector companies such as Indian Railways Finance Corporation and Power Finance Corporation.
Chirag Setalvad and Rakesh Vyas manage the fund.
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