SBI Mutual Fund launches Child Plan with exposure to gold : 10 points

SBI Mutual Fund has launched the New Fund Offer (NFO) of SBI Magnum Children's Benefit Fund - Investment Plan last week. It is an open-ended equity-oriented fund for investment for goals related to your child. According to the fund house, SBI Magnum Children's Benefit Fund- Investment Plan is suitable for child aged 1 to 14 years. The NFO of SBI Magnum Children's Benefit Fund - Investment Plan is open for subscription and will close on September 22.

The fund house already has an existing child specific fund - SBI Magnum Children's Benefit Fund- Savings Plan which is predominantly a debt-oriented scheme.

Here are the 10 points to know about SBI Magnum Children's Benefit Fund - Investment Plan:

• The scheme will have an equity allocation of 65-100%. It will be taxed as an equity scheme. This means that for holding periods of less than one year, short-term capital gains tax of 15% will apply and for longer holding periods, long-term capital gains tax of 10% will apply.
• For the equity portion, the fund will follow a multi cap strategy.
• The fund manager, at his own discretion may invest up to 35% in international equities, up to 20% in gold ETFs and up to 10% in real estate investment trusts (REITs). There is no compulsory minimum allocation.
• As per Sebi mandate for solution-oriented funds, SBI Magnum Children's Benefit Fund will have a lock-in period of five years or until the child attains the age of 18, whichever is earlier.
• The scheme will be managed by R. Srinivasan (equity portfolio) and Dinesh Ahuja (debt portion).
• Investment can be made from the child’s account or from a joint account with the child. Investment cannot be made from the parent’s bank account.
• The parent will manage the investment till the child turns 18. Thereafter, the account will be frozen till know your customer (KYC) formalities are completed by the child. Once KYC is done, the child can operate the folio on his or her own.
• The expense ratio for the scheme is capped at 2.25% of the assets.
• There is no dividend option and only growth option will be permitted.
• SBI Magnum Children's Benefit Fund - Investment Plan will be benchmarked against Crisil Hybrid 35+65 - Aggressive Index.