Children’s Mutual Funds Surge: AUM Jumps 160% in Five Years

Growth trajectory  
Children’s mutual funds, designed to support long-term financial planning for education and future needs, have seen remarkable expansion. The category recorded a compound annual growth rate (CAGR) of over 21% during the period, with folios increasing from 29 lakh to 32 lakh. Analysts expect the segment to continue growing at over 10% annually in the coming years.  

Drivers of demand  
ICRA highlights that education costs in India are rising at 11–12% annually, prompting parents to seek disciplined, market-linked solutions. Children’s funds, which blend equity and debt exposure, have delivered average returns of 4% (1-year), 14% (3-year), and 17% (5-year) as of November 2025, outperforming traditional savings instruments like fixed deposits.  

Major takeaways  
• AUM surged to ₹25,700 crore in November 2025 from ₹9,900 crore in 2020  
• CAGR of over 21% in five years, with folios up 10%  
• Rising education costs a key driver of demand  
• Average returns: 4% (1-year), 14% (3-year), 17% (5-year)  
• Around 12 schemes currently available in the category  

Impact  
The surge underscores growing investor confidence in goal-based investing. For parents, children’s mutual funds are emerging as a preferred vehicle to balance long-term wealth creation with rising education expenses.  

Sources: Cafemutual, CNBC TV18, News18