BEST TAX SAVING MUTUAL FUNDS - ELSS
Mutual funds offer schemes of investment which qualify for tax exemption under section 80C of income tax act. One can invest ₹.150, 000 in these schemes and take tax exemption on it. These are called Equity Linked Saving Scheme. These are essentially equity schemes where the fund invests in the exchange traded equities.
These schemes have a lock-in period of 3 years. The return on the amount invested in these scheme are tax exempt. One can invest lump sum as well as in SIP mode in these schemes. In case of SIP mode of investment each instalment of the SIP has a lock in of 36 months such that the investment made in the 1st month is free from lock –in on 37th month and so and so forth.
While selecting ELSS fund one should look at
a. Longer the fund has been in existence the better
b. Higher the returns since inception over longer period the better
Some of the best tax saving schemes are summarised here;
1. Axis Long Term Equity Fund (G): ELSS Category
Launch Date: December 2009
Asset under management: 16,107cr,
Return since Inception: 19.92% return per annum.
The fund typically invests about 50% to 70% in large-cap reputed companies with the remaining portion of the portfolio invested in small- and mid-cap stocks. The investment team follows a detailed research process that aims to identify under-researched ideas for stock picking.
Performance:
1 year return: 36.73% per annum
3 year return: 12.38% per annum
5 year return: 18.24% per annum
A SIP of 5000 per month started on 15th February 2015 would equal investment of 1.8lakhs and its value as on 17th Jan 2018 would be 2.53lakhs, a SIP return of 24.7% per annum.
Risk: This is a moderately high risk fund since it is an all equity scheme.
2. Reliance Tax Saver Fund (G): ELSS Category
Launch Date: September 2005
Asset under management: 10,758cr,
Return since Inception: 17% return per annum.
The fund typically invests in midcap and small cap stocks, focus is to get returns from growth stocks. The investment also occasionally switches to large cap based on market performance.
Performance:
1 year return: 36.73% per annum
3 year return: 12.38% per annum
5 year return: 18.24% per annum
A SIP of 5000 per month started on 15th February 2015 would equal investment of 1.8lakhs and its value as on 17th Jan 2018 would be 2.53lakhs, a SIP return of 24.7% per annum.
Risk: This is a moderately high risk fund since it is an all equity scheme.
3. DSP Blackrock Tax Saver (G): ELSS Category
Launch Date: January 2007
Asset under management: 3834cr,
Return since Inception: 15.58% return per annum.
The fund invests more than 80% in large renowned companies and balance in medium and small companies. The fund house is known for exhaustive research and sticking to investment philosophy.
Performance:
1 year return: 30.62% per annum
3 year return: 15.41% per annum
5 year return: 20.62% per annum
A SIP of 5000 per month started on 15th February 2015 would equal investment of 1.8lakhs and its value as on 17th Jan 2018 would be 2.47lakhs, a SIP return of 22.86% per annum.
Risk: This is a moderately high risk fund since it is an all equity scheme.
4. Aditya Birla Sun Life Tax Relief 96 (G): ELSS Category
Launch Date: March 1996
Asset under management: 4759cr,
Return since Inception: 25.97% return per annum.
The fund typically invests about 50% in large-cap growth companies, and balance in mid and small cap. The fund document prescribes allowing investment in debt also but at any point in time the fund has more than 80% equity investment. This is one of the oldest fund and has been a strong performer over years.
Performance:
1 year return: 38.27% per annum
3 year return: 15.17% per annum
5 year return: 21.96% per annum
A SIP of 5000 per month started on 15th February 2015 would equal investment of 1.8lakhs and its value as on 17th Jan 2018 would be 2.48lakhs, a SIP return of 23.29% per annum.
Risk: This is a moderately high risk fund since it is an all equity scheme.
5. IDFC Tax Advantage (ELSS) Fund: ELSS Category
Launch Date: December2008
Asset under management: 897cr,
Return since Inception: 21.99% return per annum.
The fund typically invests about 50% in large-cap growth companies, and balance in mid and small cap.
Performance:
1 year return: 47.10% per annum
3 year return: 16.99% per annum
5 year return: 21.59% per annum
A SIP of 5000 per month started on 15th February 2015 would equal investment of 1.8lakhs and its value as on 17th Jan 2018 would be 2.63lakhs, a SIP return of 27.67% per annum.
Risk: This is a moderately high risk fund since it is an all equity scheme.