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HDFC Mutual Fund launches Children's Gift Fund

Aparajita Saha in Bombay

HDFC Mutual Fund launched the HDFC Children's Gift Fund on Tuesday. The primary objective of the open-ended balanced fund is to generate long-term capital appreciation for investors.

The minimum amount required as initial investment in the scheme is Rs 3,000 and in multiples of Rs 1,000 thereafter. Investors may invest in the name of a child of less than 18 years of age. The investment remains with the fund until the unit-holder turns 18 or for a period of three years, whichever is later.

The initial public offer opens on January 25 and closes on February 2, 2001.

Commenting on the minimum amount of Rs 3,000 required for initial investment, Milind Barve, MD, HDFC Asset Management Company Ltd, states, "Our aim is to encourage early investment and ensure that the capital stays invested. We are keen to make all members of the investing public a part of the mutual fund industry and hope to attract over 20,000 investors for this scheme."

A unique feature of the HDFC Children's Fund is that unit-holders are entitled to a personal accident insurance cover subject to a maximum amount of Rs 300,000 per unit-holder. The insurance premium will be borne by HDFC Asset Management Company Ltd.

Barve, while underlining the need for this scheme, says, "Escalating costs are making it difficult for parents to meet financial goals for their children's secure future. The Children's Gift Fund is specifically designed to persuade parents to invest early and save for their child's future."

The scheme offers two plans to investors in the form of an investment plan that is equity-oriented and a savings plan that is debt-oriented.

Describing the conservative HDFC approach to investing and stressing on its long-term commitment and experience in fund management, Sanjoy Bhattacharya, chief investing officer, says, "There is no emphasis on one particular sector. We are diversifying the investments over 5-6 sectors with about 15-20 per cent exposure on each sector.

"We are looking at companies that have a stable cash flow, are run efficiently and honestly, and project consistent growth. Single company exposure shall not exceed 10 per cent of the entire fund."

HDFC Mutual Fund currently manages assets worth Rs 14 billion. HDFC Growth Fund, HDFC Balanced Fund, HDFC Income Fund, HDFC Liquid Fund and HDFC Tax Plan 2000 are among the other schemes launched by it since its inception in August 2000.

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