Children’s mutual funds grow 21 pc in 5 years driven by rising education costs
The Children’s mutual fund category has recorded strong growth of around 21.08 per cent in the last 5 years and is expected to register double‑digit expansion in the coming years, a report showed on Monday.
New Delhi: The Children’s mutual fund category has recorded strong growth of around 21.08 per cent in the last 5 years and is expected to register double‑digit expansion in the coming years, a report showed on Monday.
The report from ICRA Analytics said that the growth will be driven by the rising cost of education, which has been increasing by 11–12 percent annually. Further, the superior returns generated by these funds are driving parents toward market-linked instruments for long-term planning,
The assets under management (AUM) of children’s mutual funds rose 160 per cent over five years to Rs 25,675 crore in November, 2025 up from Rs 9,866 crore five years earlier.
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The number of folios climbed to about 32 lakhs in November, 2025 from roughly 29 lakhs five years ago.
There are 12 such funds currently available in the market, while the top-performing funds have delivered an average CAGR of 15-20 percent in the last three-to-five years, it noted.
The fund ranked first in the category delivered 34.35 per cent in 5 years, 22.85 per cent in 3 years and 10.89 per cent in last one year.
“Parents increasingly prefer these funds because they combine equity and debt exposure, offer superior returns compared to traditional options like fixed deposits,
and enforce a lock-in period of five years or until the child turns 18, promoting long-term savings,” Ashwini Kumar, Senior Vice President and Head Market Data, ICRA Analytics, said.
“The growth outlook for the Children’s Mutual Fund category in India is highly promising, supported by strong historical performance and evolving investor preferences,” Kumar said.
Average returns stood at around 4 per cent for one year, 14 per cent for three years and 17 per cent for five years.
Investors are expecting the mutual fund industry to grow at a 10–18 per cent CAGR through 2033, while this category is poised to become a mainstream choice for goal-based investing, offering disciplined savings, tax benefits, and superior returns compared to traditional options, the report said.
Greater financial awareness, digital penetration, and regulatory support for solution-oriented schemes will further strengthen adoption.
