Published Jun 29, 2026 4 Min Read

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Introduction

A mutual fund for child is a mutual fund investment made by a parent or guardian to build wealth for a child's future needs. You can invest regularly through an SIP or make a one-time lumpsum investment depending on your financial goals.

  • A child can be the beneficiary, while the investment is managed by the parent or legal guardian until the child becomes eligible. 
  • SIP investments start from Rs. 100 per month on the Bajaj Broking website for eligible schemes. 
  • Investors can choose from 4,000+ mutual fund schemes across equity, debt, hybrid, ELSS and thematic categories. 
  • KYC is mandatory before investing, as required by SEBI. 
  • Mutual fund schemes display the SEBI-mandated riskometer, ranging from Low to Very High, to indicate investment risk. 

Start investing for your child's future on the Bajaj Broking website by completing your KYC, comparing mutual fund schemes and choosing SIP or lumpsum investments based on your financial goals.

What is a mutual fund for child?

A mutual fund for child is a mutual fund investment made to create wealth for a child's future financial goals, such as education, higher studies or other major expenses. The investment is made by the parent or legal guardian on behalf of the child.

Like any mutual fund, the scheme is managed by the respective Asset Management Company (AMC). When you invest, you receive mutual fund units based on the applicable Net Asset Value (NAV), which is calculated once every trading day after the market closes.

How does a children's mutual fund work?

A children's mutual fund works like any other mutual fund, but the investment is made for the benefit of the child. The parent or legal guardian manages the investment until the child becomes eligible to take control according to the applicable scheme rules.

StepHow it works
Choose a schemeSelect a mutual fund that matches your child's future financial goal.
InvestStart investing through SIP or make a lumpsum investment.
Unit allocationMutual fund units are allotted based on the applicable NAV.
Portfolio managementThe respective AMC manages the underlying investments.
Goal-based growthYour investment grows according to market performance until you redeem the units or as permitted under the scheme.

Which types of mutual funds can you choose for your child?

There is no separate mutual fund category exclusively for children. Depending on your financial goal and investment horizon, you can choose different mutual fund categories for investing on behalf of your child.

Mutual fund typeWhat it invests inRisk level*Suitable for
Equity fundsShares of listed companiesHigh to Very HighLong-term goals such as higher education
Debt fundsFixed-income securitiesLow to ModerateShort- to medium-term goals
Hybrid fundsEquity and debt securitiesModerate to HighBalanced long-term investing
ELSS fundsEquity securities with tax-saving benefitsVery HighLong-term wealth creation with Section 80C tax benefits

*Risk levels are based on the SEBI-mandated riskometer. Always review the scheme's riskometer before investing.

Why should you invest in a mutual fund for your child?

Investing in a mutual fund for child can help you build a corpus for future financial goals, such as higher education, professional courses or other important life milestones. Starting early also gives your investment more time to grow through the power of compounding.

BenefitWhy it matters
Goal-based investingHelps you save for your child's future education or other long-term goals.
Regular investingYou can invest through an SIP or make a lumpsum investment, depending on your financial plan.
Potential for long-term growthA longer investment horizon gives your money more time to benefit from market growth.
Flexible investment optionsChoose from equity, debt or hybrid mutual funds based on your goals and risk appetite.
Affordable starting pointOn the Bajaj Broking website, SIP investments start from Rs. 100 per month for eligible schemes.

Remember that mutual fund returns are market-linked and not guaranteed. Always review the SEBI-mandated riskometer, which ranges from Low to Very High, before investing.

How do you choose the best mutual fund for your child in India?

The best mutual fund for child depends on your child's financial goals, investment horizon and your risk appetite. Instead of choosing a fund based only on past returns, compare the features that matter most.

FactorWhat to evaluateWhy it matters
Financial goalEducation, higher studies or other future expensesHelps you select a suitable investment strategy.
Investment horizonNumber of years before the money is neededLonger horizons may allow you to consider equity-oriented funds.
Risk appetiteYour ability to handle market fluctuationsChoose a fund whose risk level matches your comfort.
Fund categoryEquity, debt or hybridDifferent categories suit different financial goals.
SEBI riskometerRisk level from Low to Very HighHelps you understand the scheme's investment risk before investing.

Before investing, complete your mandatory KYC and compare schemes carefully. On the Bajaj Broking website, you can explore 4,000+ mutual fund schemes across equity, debt, hybrid, ELSS and thematic categories.

What is the tax treatment of children's mutual funds in India?

There is no separate tax treatment simply because a mutual fund investment is made for a child. The taxation depends on the type of mutual fund and the applicable tax rules at the time of redemption.

If the investment is made by a parent or guardian on behalf of a minor, the tax treatment may also be subject to the clubbing provisions under the Income-tax Act, wherever applicable. Tax rules can change over time, so you should consult a qualified tax adviser before making investment decisions.

Tax aspectGeneral treatment
Investment typeTax depends on the mutual fund category and applicable tax laws.
Capital gainsTax is generally applicable when mutual fund units are redeemed, subject to prevailing tax rules.
Clubbing provisionsIncome from investments made for a minor may be taxable in the hands of the parent or guardian, subject to applicable provisions of the Income-tax Act.

Conclusion

A mutual fund for child can help you create a long-term investment corpus for important goals such as education or higher studies. Starting early through an SIP or a lumpsum investment gives your money more time to grow while allowing you to invest according to your financial plan.

Before investing, consider your child's future goals, investment horizon and risk appetite. Always review the SEBI-mandated riskometer and complete your mandatory KYC. On the Bajaj Broking website, you can choose from 4,000+ mutual fund schemes across equity, debt, hybrid, ELSS and thematic categories, with SIP investments starting from Rs. 100 per month for eligible schemes.

Frequently asked questions

Are children's mutual funds safe?

Like all mutual funds, children's mutual funds are subject to market risk and do not guarantee returns. The level of risk depends on the underlying mutual fund scheme and its investments. Before investing, review the SEBI-mandated riskometer, which classifies schemes from Low to Very High risk. On the Bajaj Broking website, you can compare 4,000+ mutual fund schemes to choose one that matches your financial goals and risk appetite.


How long is the money locked in a children's mutual fund?

The lock-in period depends on the specific mutual fund scheme you choose. Most mutual funds do not have a mandatory lock-in, but some children's mutual fund solutions may have restrictions on withdrawals until the child reaches a specified age or for a minimum investment period. Always check the scheme's Scheme Information Document (SID) before investing to understand any lock-in or redemption conditions.


Can I start an SIP in a mutual fund for my child?

Yes. You can start an SIP in a mutual fund for your child through a parent or legal guardian. An SIP is an investment method that lets you invest a fixed amount at regular intervals into a chosen mutual fund scheme. On the Bajaj Broking website, SIP investments start from Rs. 100 per month for eligible schemes after completing your mandatory KYC.


What happens to a children's mutual fund when the child turns 18?

When the child turns 18 years old, the mutual fund folio usually needs to be updated from a minor account to a major account. The child must complete the required KYC and submit the documents requested by the respective Asset Management Company (AMC) or its Registrar and Transfer Agent (RTA). Until this process is completed, certain transactions may be restricted according to the AMC's requirements.

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The information contained in this article is for general informational purposes only and does not constitute any financial advice. The content herein has been prepared by BFL on the basis of publicly available information, internal sources and other third-party sources believed to be reliable. However, BFL cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed.

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