Technically, Mutual Funds are non transferable and therefore, gifting of MF units is not possible. If one wishes to do so, one should sell his/her MF units, transfer funds as gift to sister and she may purchase same MF units in her name. However, if sister is a minor ,then only gurdian can purchase the MF units on behalf of minor.
Unlike shares, mutual fund units cannot be simply transferred from one person to another, except on demise of the unit-holder.
The ideal way to do it is to open a minor bank account in your sister's name. You can be the guardian for her.
Also, investments have to be done in your sister's name with you as a guardian.
When she turns into an adult, she will have to apply for a status change (from minor to major) for those investments and they will eventually be in her name.
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