You cannot avoid tax on any gains made on the fund. Exit tax of 23% will automatically deducted on encashment-it is irrelevant that the investment was made on behalf of your children.
If you wish to gift the money to your children, it may be subject to CAT, i.e. if you give it as a lump sum. In this case, it will form part of the aggregate amount of gifts and inheritances that are allowable tax free (under the threashold of €478,155 currently), i.e. once your children receive over the threshold amount from you or your wife they are liable for tax at 20%.
But is this the route you want to go? What do you intend for your children to do with the money?
If it is to go to college, a monthly allowance out of the proceeds of the fund may 'avoid' tax, but I'm not 100% sure on that. In any event, the first €3,000 taken in any one year will be exempt from CAT.
If you intend to give them money towards buying a house, the position may be different again-there is discussion of gifts from parents when buying a house elsewhere on the site-I may post a link if I can find it.