HDFC Children’s Gift Fund – Direct Growth

An aggressive Hybrid mutual fund strategy offered by HDFC Mutual Fund is HDFC Children’s Gift Fund. This fund was established on January 25, 2001, and has been around for 22 years.
As of December 31, 2022, HDFC Children’s Gift Fund had assets under management (AUM) totalling Rs 6,100 Crores, making it a medium-sized fund in its category. At the moment, the fund is allocated 66.00% to equity and 30.62% to debt. The fund is managed by Mr Anil Bamboli.

Pros and Cons

How to Invest in HDFC Children’s Gift Fund?

You can certainly work your way out with the HDFC Children’s Gift Fund if you believe that holding the investments in your child’s name will make you more driven and disciplined to band a particular allocation from your other investments.
When a child turns 18 and has no other source of income, the tax obligation is typically little or nonexistent. This would undoubtedly be less than what parents, who are probably in a higher tax rate, would pay.

What is the Expense Ratio?

The term “Expense Ratio” can be explained as the yearly fees that the investor is required to pay to HDFC company for the firm’s fund managers team managing the shareholder’s interests in the children’s gift fund. A lesser expense ratio would imply better returns to the investor since costs are cut down.

Who should invest in the HDFC Children’s Gift Fund?

The recommended investment horizon for the HDFC Children’s Gift Fund is greater than three years. The advised investment horizon is the shortest period of time that investments in the fund should be held for the returns to become more predictable and the fund’s downside risk to be minimized.
As per SEBI’s latest guidelines to calculate risk grades in the stock market, investments under the HDFC Children’s Gift Fund come under the Very High-risk category of finances. So, only those investors who are experienced and have enough capital to be able to handle losses are advised to go for it.
Investors need to be well-versed in tax implications and market conditions. Considering that the market is dynamic, asset allocation to equities may rise or fall based on the current market and economic conditions. As a result, depending on the provided fund’s asset allocation, its tax treatment will change.

Benefits

● It is a very large and diverse fund. The asset allocation of the fund comprises approximately 66.87% in equities, 25.37% in debts and 7.76% in cash or equivalents. While the top 10 equity holdings constitute around 34% of the assets, the top 3 sectors constitute around 39.71% of the assets.
● In the past year, the HDFC Children’s Gift Fund has returned 5.71%. It has produced average yearly returns of 15.86% since the start. Every three years, the investment has doubled thanks to the fund. It can be concluded that this fund is profitable.
● Consistent return delivery is a strength shared by the majority of funds in this category, including the HDFC Children’s Gift Fund programme. In a down market, it has an above-average capacity to limit losses. This immensely benefits the investors.
● Investments in the financial, capital goods, technology, energy, and services sectors make up the majority of the fund’s stock holdings. Investors are not only guaranteed high returns, but the returns are from the best areas.
● ICICI Bank Ltd., Infosys Ltd., Reliance Industries Ltd., HDFC Bank Ltd., and GOI are the top 5 holdings of the fund. Suffice it to say; the fund is well-backed and definitely lucrative.