Children’s MF boom 160% in 5 years: AUM hits Rs 25,675 cr amid high education costs; should you invest?

Imagine this: You're a parent staring down skyrocketing college fees, wondering how to turn your savings into something that actually keeps up. Over the last five years, that's exactly what thousands of Indian moms and dads have done by investing in children's mutual funds. 

Children's Mutual Funds have surged 160% in Assets Under Management (AUM) over the past five years, reaching Rs 25,675 crore as of November 2025, up from ₹9,866 crore in November 2020, according to ICRA Analytics. Folios jumped from 29 lakhs to 32 lakhs, signaling parents' growing shift from fixed deposits to market-linked plans for kids' futures.

These 12 funds blend equity and debt, enforce a 5-year lock-in (or until age 18), and deliver superior returns. Category averages: 4% (1-year), 14% (3-year), and 17% (5-year) CAGR as of November 2025. Top performers like SBI Magnum Children's Benefit Fund clocked 34.35% 5-year CAGR, outpacing rising education costs (11-12% annually).

Average gains? Around 4% over one year, 14% over three, and a solid 17% over five years. The category itself grew at 21.08% CAGR, with ICRA forecasting double-digit expansion ahead, fueled by financial awareness, digital access, and regulatory nods for goal-oriented schemes.

Top 5 schemes by 5-year performance (CAGR % as of Nov 2025)

The rockstar? SBI Magnum Children's Benefit Fund, with a whopping 34.35% five-year CAGR. No wonder families are swapping safe-but-boring options, such as fixed deposits, for these growth machines, especially as education costs climb 11-12% every year.

Scheme Name    1-Year    3-Year    5-Year

SBI Magnum Children's Benefit Fund - Investment Plan - Reg - Growth    10.89    22.85    34.35

ICICI Prudential Children's Fund    7.54    18.04    19.14

HDFC Children's Fund (Lock-in) - Reg - Growth    2.23    14.95    18.46

Tata Children's Fund - Reg    0.13    12.88    18.09

UTI Children's Equity Fund - Growth    2.20    12.38    17.65

As of November 2025, SBI Magnum Children’s Benefit Fund (Investment Plan) leads the pack with an impressive 5-year CAGR of 34.35%, supported by strong 3-year returns of 22.85%. ICICI Prudential Children’s Fund follows with a steadier 19.14% 5-year CAGR, reflecting balanced equity exposure.

HDFC Children’s Fund (Lock-in) and Tata Children’s Fund delivered comparable long-term returns of 18.46% and 18.09%, respectively, despite muted 1-year performance amid market volatility. UTI Children’s Equity Fund rounded out the top five with a 17.65% 5-year CAGR.

Ashwini Kumar, Senior Vice President and Head of Market Data at ICRA Analytics, attributes the boom to escalating education expenses and disciplined investing needs. "Parents favor these funds for combining growth potential with lock-ins that curb impulsive withdrawals. Some schemes have hit over 30% 5-year CAGR, far exceeding traditional savings," he said.

Kumar predicted sustained momentum in the next few years. "The mutual fund industry eyes 10-18% CAGR through 2033, with children's funds riding this wave via double-digit growth. They're becoming mainstream for goal-based planning, offering tax perks and better yields," he said.