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Should I invest in children’s plan or equity mutual funds?

If you have any mutual fund queries, message on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.

ET Online|
Aug 22, 2019, 04.53 PM IST
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Are children’s plan better or equity mutual funds? I have an investment horizon is of 15 years.
-Pankaj Dalal

Most of the children’s plans from mutual funds are in the hybrid category. Some schemes are aggressive hybrid, while some others are conservative hybrid or balanced schemes. If you are a conservative investor, you may opt for conservative hybrid schemes that will invest mostly in debt instruments and a small exposure to equity mutual funds. If you can take a little extra risk, you can opt for balanced schemes that invests equally in equity and debt. Want to take more risk, aggressive hybrid funds should be your choice: these schemes invest around 65-80 per cent equity and 20-35 per cent in debt. As you can see, it is all about choices. You should choose a scheme based on your risk profile.

Pure equity schemes, as the name suggests, invest most of the corpus in equity. You have the choice of large cap (suited for conservative equity investors), multi cap (suitable for moderate risk profiles) and mid cap and small cap schemes (suitable for aggressive investors) in the equity category. If you have the necessary risk appetite, you may consider investing in these schemes. Otherwise, chose a hybrid scheme based on your risk profile.
(If you have any mutual fund queries, message us on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.)

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