Best Mutual Fund Plans for Children 2026

For investors, the primary goal of investing is to generate returns and secure their financial future. In addition to achieving personal financial goals, many investors strive to make their children financially secure through their investments. Making sound financial decisions early on can help create a substantial corpus for your children. Investing in the best children's mutual fund is one way to achieve this. Read on to learn more.

Best Children’s Mutual Funds to Invest in 2026

A children’s mutual fund is an investment option that specifically caters to children and their financial future. These funds are similar to other mutual funds but come with a 5-year lock-in period or till the child reaches adulthood. Here are some of the top mutual funds for a child that you can invest in.

The top children's mutual funds based on the 3-year annualised returns.

(Data as of 9 June, 2026)

Overview of the Best Children's Mutual Funds

Here are some key details about the best mutual funds for children.

(Please note, the data is as of 9 June, 2026)

SBI Magnum Children's Benefit Fund Investment Plan Direct-Growth

• 3Y Annualised Returns - 23.26%
• Carries a very high risk
• Assets Under Management (AUM) - ₹6,114.10 Cr.
• 80.71% of funds allocated to equity, 19.3% held as cash, and 0.16% to debt.
• NAV - ₹50.37
• Expense Ratio - 1.83%
• Minimum SIP Amount - ₹500

ICICI Prudential Children's Fund Direct Growth

• 3Y Annualised Returns -15.68%
• Carries a very high risk
• AUM - ₹1,407.83 Cr.
• 83.38% of funds allocated to equity, 13.68% to debt, 2.94% held as cash
• Minimum SIP - ₹100
• Expense Ratio - 1.38%
• NAV - ₹355.04

HDFC Children's Fund Direct Plan

• 3Y Annualised Returns - 9.88%
• Carries a very high risk
• AUM - ₹10,114.42 Cr.
• 64.95% of funds allocated to equity, 29.23% to debt, 5.82% held as cash
• Minimum SIP - ₹100
• Expense Ratio - 0.99%
• NAV - ₹311.99

LIC MF Children's Fund Direct Growth

• 3Y Annualised Returns - 9.79%
• Carries a very high risk
• AUM - ₹14.85 Cr.
• 82.24% of funds allocated to equity, 10.53% to debt and 7.24% held as cash
• Minimum SIP - ₹200
• Expense Ratio - 1.51%
• NAV - ₹35.90

UTI Children's Equity Fund Direct Growth

• 3Y Annualised Returns - 9.75%
• Carries a very high-risk
• AUM - ₹1,087.38 Cr.
• 93.84% of funds allocated to equity, and 6.13% held as cash
• Minimum SIP - ₹500
• Expense Ratio - 1.32%
• NAV - ₹87.28

Axis Children's Fund Direct Compulsory Lock-In Growth

• 3Y Annualised Returns - 9.16%
• Carries a very high-risk
• AUM - ₹881.94 Cr.
• 70.24% of funds allocated to equity, 28.47% to debt, 0.63% held as cash.63% in real estate
• Minimum SIP - ₹1,000
• Expense Ratio - 1.47%
• NAV - ₹28.87

UTI Children's Hybrid Fund Direct Plan

• 3Y Annualised Returns - 7.33%
• Carries a very high risk
• AUM - ₹4,314.95 Cr.
• 52.22% of funds allocated to debt, 37.44% to equity, 10.28% held as cash and 0.06% in real estate
• Minimum SIP - ₹500
• Expense Ratio - 1.48%
• NAV - ₹40.51

Advantages of Investing in a Mutual Fund for Children

There are several significant advantages to investing in the best children's mutual funds.

Potential for Growth

For investors, growing their corpus and generating wealth are key goals. By investing in a children's mutual fund, investors can park funds for the long term and build a substantial sum for their children, helping secure their financial future.

Helps Stay Invested

Most children’s mutual funds have a 5-year lock-in period. Early withdrawals may incur penalties and fines, which may affect potential gains. As a result, investors are more likely to stay invested for the long term and follow a disciplined investment approach.

Tax Benefits

Investing in instruments such as a children's mutual fund offers tax benefits under Section 80C of the Income Tax Act. As a result, this investment is not only a good way to grow your funds but also to enjoy tax benefits.

Securing Your Child's Future

The primary goal and advantage of a children's mutual fund is that it is a useful tool to secure your child's future. The capital appreciation of a children's mutual fund can enable your child to pursue further education or kick-start a career.

Flexibility

A children’s mutual fund also offers flexibility to investors. They can decide on the investment tenure, as these funds usually have a 5-year lock-in period or continue until the child reaches adulthood. This allows the investors to plan their investments according to their financial goals. Moreover, ownership of a children’s mutual fund can also be transferred to the child once they reach adulthood after completing the necessary KYC requirements.

Things to Consider Before Investing in a Children's Mutual Fund

Here are some key points to consider before investing in a children's mutual fund.

• A children's mutual fund typically has a 5-year lock-in period. Before investing, it is crucial to evaluate your investment horizon and liquidity requirements.
• The risk of a children's mutual fund ranges from moderate to high. When making an investment decision for a child's mutual fund, make sure you understand your risk appetite and act accordingly.
• Compare the expense ratios, costs, fees, and penalties of different funds before investing.  

Conclusion

As a parent, investing in the best children's mutual fund can be a significant decision that can provide a bright future for your child. These funds not only encourage investors to remain invested but also provide capital growth and tax benefits. Carefully compare different funds, their performance, and the lock-in period before making your investment decision.

Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.

To read the RA disclaimer, please click here