ELSS mutual funds

Top 10 ELSS mutual funds in India. All you need to know

As per SEBI regulations, an ELSS fund has to invest a minimum of 80% of its assets in equity and equity-related instruments. It is a savings scheme that comes with tax benefits. An individual can claim a tax rebate of an amount up to Rs. 1.50 lakh and save up to Rs. 46,800/- in a financial year.

Advantages:

  1. Tax Deduction: Any investor investing in an ELSS fund can claim the tax benefit of an amount up to Rs. 1.5 Lakh under Section 80C of the Income Tax Act and save up to Rs. 46,800/- a year.
  2. Shortest Lock-in Period: Only the ELSS fund is the scheme that comes with the shortest lock-in period when compared to other tax savings options available.
  3. Higher Returns: ELSS is the only scheme among other options available that have delivered higher returns.

The habit of Savings: An individual can develop the habit of savings by investing in these funds through SIP (Systematic Investment Plan) with as low as Rs. 500.

Top 10 ELSS mutual funds

S.No.Fund Name3-Yr Annualized Performance
1Quant Tax Plan Direct Option Growth Plan36.22 %
2Bank of India Tax Advantage Fund Direct Plan-Growth25.13 %
3IDFC Tax Advantage (ELSS) Fund Direct Plan-Growth22.18 %
4Canara Robeco Equity Taxsaver Fund Direct Plan Growth Option21.59 %
5Mirae Asset Taxsaver Fund Direct Plan-Growth20.94 %
6Union Long Term Equity Fund Direct Plan Growth Option19.99 %
7Mahindra Manulife ELSS kar Bachat Yojana Direct Plan-Growth19.91 %
8DSP Tax Saver Fund Direct Plan-Growth19.61 %
9PGIM India ELSS Tax Saver Fund Direct Plan-Growth19.32 %
10UTI Long Term Equity Fund Growth Option Direct18.87 %
Note: Data as of July 24, 2022
Source: Morningstar

Read more: Top 10 large cap mutual funds to invest in India

1. Quant Tax Plan Direct Option Growth Plan

Fund analysis:

The fund’s objective is to generate Capital Appreciation by investing predominantly in a well-diversified portfolio of Equity Shares with growth potential. The risk grade is high and the return grade is high.

The fund has a beta of 0.99 which means that the fund movement is very much relative to the market movement. The fund has a high risk (measured by standard deviation) than the category average.

ProsCons
Well-diversified portfolio.Tax benefit.Highly volatile.

2. Bank of India Tax Advantage Fund Direct Plan-Growth

Fund analysis:

The fund has outperformed the category average over the long-term period. The risk grade is below average and whereas the return grade is high.

The fund has invested majorly in large-cap growth companies with 83.14% of its assets. The fund has low risk (measured by standard deviation) than the category average.

ProsCons
Major holding is in Bluechip companies. Tax benefit.Fund has underperformed the category average in 1-Yr trailing returns.

3. IDFC Tax Advantage (ELSS) Fund Direct Plan-Growth

Fund analysis:

The fund is a consistent performer and has been rated 4-star by Morningstar. The risk grade is high, and the return grade is high.

The fund has a beta of 1.16 indicating an aggressive approach toward the stock selection. Along with investing in large-cap companies, the fund has exposure to mid-cap (19.32%) & small-cap (13.60%) companies. The fund has a high risk (measured by standard deviation) than the category average.

ProsCons
Fund has outperformed the category average when the market was rising. Tax benefit.Fund has underperformed the category average when the market was falling.

4. Canara Robeco Equity Taxsaver Fund Direct Plan Growth Option

Fund analysis:

The fund has given consistent performance over the period. The risk grade is below average, and the return grade is high.

The fund flows growth style of investing and majority of holding is in large-cap companies. The fund holds a well-diversified portfolio. The fund has invested across market capitalization and sectors. The fund has low risk (measured by standard deviation) than the category average.

ProsCons
Fund has outperformed the category average when the market was falling. Tax benefit.Fund has underperformed the category average when the market was rising.

5. Mirae Asset Tax Saver Fund Direct Plan-Growth

Fund analysis:

The fund is one of the top performing funds in its category. It has outperformed the category average over the long-term period. The fund is rated 5-star by Morningstar. The risk grade is average, and the return grade is high.

The fund follows a blended style of investing which indicates that the fund is holding both value and growth stock in the portfolio.

The fund has good assets under the management of Rs. 11,494.59 crore, which shows the reliability of investors. The fund has a high risk (measured by standard deviation) than the category average.

ProsCons
Fund has outperformed the category average when the market was falling. Tax benefit.Assets Under Management are high.

6. Union Long Term Equity Fund Direct Plan Growth Option

Fund analysis:

The fund has outperformed the category average over the long term. The risk grade is average, and the return grade is high.

The fund has a low beta of 0.95 indicating that the movement of the fund is less relative to the market movement. The fund has invested 85.27% in large-cap companies and the rest is in mid-cap (13.13%) & small-cap (1.60%) companies.

The fund has invested across sectors. The fund has low risk (measured by standard deviation) than the category average.

ProsCons
Well-diversified.Tax benefit.The fund has a high expense ratio.

Read more: Top 10 mid-cap mutual funds in India

7. Mahindra Manulife ELSS Kar Bachat Yojana Direct Plan-Growth

Fund analysis:

The fund has given stable returns over the different trailing time periods. The risk grade is average, and the return grade is average

The fund has a well-diversified portfolio of 49 holdings spread across sectors. The fund has majorly growth stocks in its portfolio. The fund has low risk (measured by standard deviation) than the category average.

ProsCons
Fund has outperformed the category average when the market was rising. Tax benefit.Low Assets Under Management.

8. DSP Tax Saver Fund Direct Plan -Growth

Fund Analysis:

The fund’s objective is to generate medium to long-term capital appreciation from a diversified portfolio that is substantially constituted of equity and equity-related securities of corporates and to enable investors to avail of a deduction from total income, as permitted under the Income Tax Act, 1961 from time to time.

The risk grade is above average, and the return grade is above average. The fund has a beta of 1.01 indicating fund movement is very much related to the market movement.

The fund is rated 4-star by Morningstar. The fund has a relatively high risk (measured by standard deviation) than the category average.

ProsCons
Fund has outperformed the category average when the market was falling. Tax benefit.The return grade is above average.

9. PGIM India ELSS Tax Saver Fund Direct Plan-Growth

Fund analysis:

The fund has outperformed the benchmark and the category marginally over the long-term period. The fund is rated 5-star by Morningstar. The risk grade is average, and the return grade is above average.

The fund follows a blended style of investing, which means it has both value and growth stocks in its portfolio. The fund has low risk (measured by standard deviation) than the category average.

ProsCons
Consistent performer.Tax benefit.The fund has a high expense ratio.

10. UTI Long Term Equity Fund Growth Option Direct

Fund analysis:

The fund has a well-diversified portfolio of 59 stocks, investing in growth stocks across market capitalization except for the energy sector, with major holdings in large-cap (69.73%) companies and the rest in mid-cap (24.14%) & small-cap (6.12%) companies.

The risk grade is average, and the return grade is above average.

The fund is rated 4-star by Morningstar and the fund has given satisfactory returns over the long term. The fund has low risk (measured by standard deviation) than the category average.

ProsCons
Fund has outperformed the category average when the market was rising. Tax benefit.The fund has a high expense ratio.

Conclusion

ELSS is the only equity-linked mutual fund scheme that provides the Tax Benefit to its investors under Section 80 C of the Income Tax Act for an amount up to Rs. 1.5 Lac.

And has the shortest lock-in period. There are two ways to invest in this scheme i.e., SIP (Systematic Investment Plan) or Lumpsum. The preferable mode of investing is Lumpsum as funds will be locked for 3 years.

Consult an expert advisor to get the right plan for you

Disclaimer:

This is not recommendation advice, use it for educational purposes only. Mutual Fund investments are subject to market risks, read all scheme-related documents carefully. The NAVs of the schemes may go up or down depending upon the factors and forces affecting the securities market including the fluctuations in the interest rates. The past performance of the mutual funds is not necessarily indicative of the future performance of the schemes.

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