The SBI Mutual Fund Child Plan that has been making news lately is turning heads for one big reason it delivered around 35% annualised returns over the last 5 years. That’s a huge number for a children-focused fund, and naturally, investors want to know what’s behind this performance.
Understanding SBI Child Plan
The plan people are talking about is SBI Magnum Children’s Benefit Fund – Investment Plan. Despite the “children” tag, it’s essentially an aggressive, equity-heavy hybrid fund designed to build a long-term education or future corpus for a child.
The real spotlight comes from its spectacular performance: about 35% annual returns over the last 5 years in its direct plan. That’s much higher than traditional child savings schemes or many standard hybrid funds.
When & Who Can Use This SBI Mutual Fund Child Plan
This plan is specifically meant for minors:
- Investments are made in the name of a child, with a parent or guardian representing them.
- It offers both regular and direct plans. The direct plan generally generates higher returns because of lower costs.
- The “Investment Plan” variant is equity-oriented, while SBI also offers a “Savings Plan”, which is more debt-focused.
If your goal is long-term growth rather than safety, this is the variant the headlines are referring to.
How the SBI Child Plan Works?
Here’s the plan in plain English:
- Aggressive Equity Exposure
The fund invests primarily in equities, including mid-cap and small-cap companies which explains the high-growth potential. - Investment Requirements
- Minimum lump sum: around ₹5,000
- SIP minimum: usually ₹500–₹1,000
- Lock-In & Exit Load
Early redemption (within 3 years) comes with a step-down exit load meaning you pay a fee if you pull out too soon. - Performance Track Record
Over 5 years, the direct plan has delivered roughly 35% annualised returns, while the regular plan is slightly lower because of distributor commissions. - Risk Level
This is a Very High Risk fund. It’s not designed for conservative investors or those wanting guaranteed returns.
Why Did the SBI Child Plan Deliver Such High Returns?
The outstanding returns come from a mix of factors:
- Heavy allocation towards mid-cap and small-cap equities, which performed exceptionally well in recent years.
- A growth-oriented strategy that benefits from long-term compounding.
- A favourable market cycle that lifted high-risk, high-reward segments.
Of course, this also means performance can fluctuate sharply in less supportive market conditions.
Risks & Common Mistakes You Should Avoid
| Mistake / Risk | Why It’s a Problem |
|---|---|
| Expecting the same 35% return every year | Equity-heavy funds don’t give consistent returns; high returns come with high volatility. |
| Treating it like a guaranteed “child savings plan” | Unlike PPF or Sukanya Samriddhi, this is not guaranteed or low-risk. |
| Not considering the lock-in and exit load | Redeeming within 3 years can reduce profits due to exit charges. |
| Stopping SIPs during market dips | You may lose out on the benefit of buying low during downturns. |
Best Tips to Make the Most of the SBI Child Plan
If you’re planning to invest, keep these practical tips in mind:
- Go for SIPs to spread risk and take advantage of rupee cost averaging.
- Stay invested for at least 5–7 years equity plans reward patience.
- Choose the Direct Plan if you are comfortable investing without an intermediary.
- Treat it as one part of your child’s portfolio, not the entire plan.
- Review once a year, especially as your child gets closer to college age.
SBI Child Plan vs SBI Savings Plan
| Feature | SBI Child Plan (Investment Plan) | SBI Child Plan (Savings Plan) |
|---|---|---|
| Primary Focus | Equity-heavy, aggressive | Debt + money market, more stable |
| 5-Year Return Range | ~35% annualised (direct) | ~14–16% annualised |
| Risk Level | Very High | Moderate |
| Best For | Long-term growth | Stability and capital protection |
| Suitable For | High-risk investors | Conservative parents |
Latest Updates & Sentiment Around the Fund
- The fund has grown significantly in popularity due to its strong 5-year performance.
- It continues to beat its benchmark index over medium-term periods.
- Some competing child funds offer more consistent returns, but few have matched this plan’s upside in recent years.
Overall, this is considered one of the most aggressive child-focused funds in India.
Conclusion
If you’re aiming to create a long-term education or future corpus for your child and you’re comfortable with market volatility, this plan is worth considering. The high historical return is impressive but remember, it’s a result of taking higher risk.
Use it alongside safer investments to strike a healthy balance. And if you decide to invest, stay committed for the long haul and avoid reacting to short-term market swings.
FAQs
1. When can I redeem units from the SBI Child Plan?
Redemption is allowed anytime, but withdrawing within 3 years triggers an exit load. Staying invested longer is recommended.
2. What happens when my child turns 18?
The investment can be transferred in the child’s name once they become a major, and they can continue or redeem it.
3. Why does this plan have such high returns?
Because it invests aggressively in equities especially mid- and small-cap stocks which can deliver strong growth during good market cycles.
4. How much should I invest monthly?
You can start with a SIP of ₹500 or ₹1,000. For long-term goals like education, many parents start with ₹2,000–₹5,000 monthly.
5. Can conservative investors choose this fund?
Not really. It’s designed for investors who can handle high volatility and are focused on long-term wealth creation.