ABSL Bal Bhavishya Yojna Mutual Fund – Should you invest?

ABSL Bal Bhavishya Yojna Mutual Fund Scheme - Should you investABSL Bal Bhavishya Yojna Mutual Fund Scheme – Review


Every one would dream about providing good quality education for  their children. To tap the opportunities in this segment, Aditya Birla Sun Life has come up with a unique mutual fund scheme “Bal Bhavishya Yojna Fund”. There are 2 plans viz. Wealth plan and savings plan in this new fund offer. This mutual fund scheme comes with a 5 year lock-in period. Since it is child mutual fund scheme, some of the parents might be thinking of investing in such funds. Should you invest in ABSL Bal Bhavishya Yojna Fund? What are the negative factors in this ABSL Bal Bhavishya Yojna Fund New Fund Offer (NFO)?

Also Read: 10 Best Mutual Fund Schemes to invest through SIP in 2019

Features of ABSL Bal Bhavishya Yojna Fund


This is an open-ended mutual fund equity scheme.

This fund invests in Equity and Debt instruments in India.

This scheme would open for subscription on 22nd January, 2019

This scheme would close for subscription on 5th February, 2019.

This scheme has lock-in period of 5 years or child attaining 18 years whichever is earlier.

Since this is an open ended scheme, it would again open for subscription after 5 business days from the date of allotment of Mf units after the NFO period.

This scheme is available in both regular and direct plans in mutual funds.

This plan offers both growth option and dividend option.

This scheme is available for lump sum and SIP investment.

Minimum investment is Rs 1,000 and in multiples of Rs 1 there-off for lump sum investments.

Minimum investment is Rs 500 per month for monthly SIP and for a tenure of 6 months.

The NAV of the NFO is Rs 10 per unit now during initial subscription.

There is no entry load to invest in this mutual fund scheme.

If one wants to exit after 5 years of investment, there is a no exit load.

This scheme is classified as high risk scheme.

Scheme total expense ratio (TER) is estimated up to 2.5% of the total assets on any day for Wealth Plan Option.

Scheme total expense ratio (TER) is estimated up to 2.25% of the total assets on any day for Savings Plan Option.

This scheme is classified as high risk.

What is the lock-in period indicated in this mutual fund scheme?


This mutual fund scheme comes with lock-in period like tax saving mutual funds. Below criteria would apply, whichever is earlier.

1) You can redeem the mutual fund schemes after 5 years or

2) The child attains 18 years of age

However, the child would be the sole unit holder.

Who can invest in this ABSL Bal Bhavishya Yojna mutual fund scheme?

Any of the following can invest in this scheme for their child

1) Natural Parents or Guardian

2) Legal Guardian

3) Donor

Who is the Fund Manager of ABSL Bal Bhavishya Yojna Fund NFO?


The Fund Managers are Mr. Ajay Garg and Mr.Pranay Sinha.

What is the benchmark for this scheme?

Since it has two plans, the benchmark is also different. Below are the benchmarks

1) For Wealth Plan, the benchmark is S&P BSE 200

2) For Savings Plan, the benchmark is CRISIL HYBRID 85+15 Conservative.

What are the plans available in this mutual fund scheme?


There are two plans available

1) Wealth Plan

2) Savings Plan

What is the investment objective and strategy of this ABSL Bal Bhavishya Yojna Fund?


Since it offers 2 plans, here are the investment objectives of both these plans.

1) Investment Objective of Wealth Plan

The primary investment objective of the Investment Plan is to seek generation of capital appreciation by creating a portfolio that is invested in equity & equity related securities and debt and money market instruments.

2) Investment Objective of Savings Plan

The investment objective of the Scheme is to generate income and capital appreciation by investing in a diversified portfolio of debt and money market securities along with equity and equity related instruments. This is more like a balanced mutual fund scheme

What is the allocation pattern in ABSL Bal Bhavishya Yojna mutual fund?


This fund investment pattern for Wealth plan is as follows:

1) It invests 65% to 100% in Equity and Equity related Instruments in India. This risk profile in this segment is medium to high.

2) It invests 0% to 35% in debt instruments. This risk profile in this segment is low to medium.

3) It invests 0% to 10% in units issued by REITs and InvITs. This risk profile in this segment is medium to high.

This fund investment pattern for Savings plan is as follows:

1) It invests 75% to 90% in debt instruments. This risk profile in this segment is low to medium.

2) It invests 10% to 25% in Equity and Equity related Instruments in India. This risk profile in this segment is medium to high.

3) It invests 0% to 10% in units issued by REITs and InvITs. This risk profile in this segment is medium to high.

Can NRI invest in ABSL Bal Bhavishya Yojna Fund?


Yes, they can invest in this scheme. They can invest on repatriation or non repatriation basis.

Can we increase the SIP amount every year?


Since it is child plan, investors would get doubt that whether we can increase the SIP amount every year. This plan comes with a half yearly step-up plan where the SIP amount can be increased by a specific amount every half year. It also comes with yearly step-up where one can increase specific amount in SIP every year. However, the minimum step-up should be Rs 500.

What is the liquidity / Redemption plan?


Since it has 5 year lock-in period or maturity once the child attains 18 years, whichever is earlier, the liquidity / redemption can be done immediately after this. However, the process of redemption would happen between 5 to 10 days.

What are the risks or negative factors involved in this fund?


One should consider some of these risk factors / negative factors before investing.

1) This scheme comes with lock-in period of 5 years or child attaining 18 years which-ever is earlier. If your child is <=13 years, it would have 5 years lock-in period for sure. Even ELSS tax saving fund has 3 years of lock-in period.

2) Investors should not assume any guaranteed returns from such child investment mutual fund schemes.

3) Since it is a new mutual fund scheme, there is no past performance, hence we would know how the fund would perform in the future.

4) Savings plan of this fund would invest in debt instruments where there is interest rate risk.

How is the Performance of Child related Mutual Funds in India?


Currently there are existing mutual fund schemes which are investing on child education / child care segment. Let us see how they have been performing in the last 5-10 years.

1) HDFC Children’s Gift Fund: This fund gave 20% annualized returns in the last 10 years, 15% annualized returns in the last 5 years, 13% annualised returns in the last 3 years. However, this fund gave 2% negative returns in the last 1 years owning to down trend in the stock markets. It is one of the best performing funds in child mutual funds segment that gave the highest returns in the last 5-10 years.

2) ICICI Prudential Child Care: This fund gave 18% annualized returns in the last 10 years, 15% annualized returns in the last 5 years, 11% annualised returns in the last 3 years. However, this fund gave 2% negative returns in the last 1 years owning to down trend in the stock markets. It is one of the best performing funds in child mutual funds segment that outperformed for 5 to 10 year period.

3) TATA Young Citizens Fund: This fund gave 12% annualized returns in the last 10 years, 10% annualized returns in the last 5 years, 6% annualised returns in the last 3 years. However, this fund gave 10% negative returns in the last 1 years owning to down trend in the stock markets. It is one of the worst performing funds in child mutual funds segment.

4) UTI Children’s Career Fund-Savings Plan: This fund gave 12% annualized returns in the last 10 years, 12% annualized returns in the last 5 years, 8% annualised returns in the last 3 years. However, this fund gave 2% negative returns in the last 1 years owning to down trend in the stock markets. It is one of the average performing funds in child mutual funds segment.

5) LIC MF Children’s Gift Fund: This fund gave 9% annualized returns in the last 10 years, 8% annualized returns in the last 5 years, 5% annualised returns in the last 3 years. However, this fund gave 9% negative returns in the last 1 years owning to down trend in the stock markets. It is one of the worst performing funds in child mutual funds segment.

6) Axis Children’s Gift Fund: This fund gave 8% annualized returns in the last 3 years. However, this fund gave 2% negative returns in the last 1 years owning to down trend in the stock markets. It is one of the worst performing funds in child mutual funds segment.

Should you invest in the Aditya Birla Sun Life Bal Bhavishya Yojna Fund for your child care?


Mutual Fund schemes can be invested for child education or child care. There are two ways to do it. 1) You can invest in mutual fund schemes based on your child age and tenure. For this you can invest in Best Child Mutual Fund schemes that can perform better in the medium to longer run 2) You can invest in mutual funds that are specially designed for child education or child care. However, such funds may come with several strings attached to it. E.g. 5 years lock-in period for this specific mutual fund scheme. You can opt for either of the options. However, if you are going for new fund offer, you have not seen the  past performance, hence you do not know how such fund would perform. Since you are investing for your child, instead of taking risk, why don’t you invest in some of the good performing mutual fund schemes which are already existing in market? Think… Think… Think.. You may conclude your thoughts !!!

ABSL Bal Bhavishya Yojna Fund NFO details can be downloaded from here.

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Suresh

ABSL Bal Bhavishya Yojna New Fund Offer

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