ELSS mutual funds are a very good option to save tax. I am sure that you must have heard about it many times. And this is true because by investing in these funds, you not only save tax but also create wealth for yourself.
But with 38 options to pick from, deciding which is best ELSS fund to invest in, can be quite confusing.
Not anymore. In Credit Gyani, we believe that we should do all the necessary work on your behalf. And in this article, we will tell you about 7 best ELSS funds, in which you can invest.
What is ELSS Funds?
So let’s get started If you have no idea about what are ELSS funds, here is a quick review. ELSS funds are a type of equity mutual fund wherein by investing in it, you can claim a deduction of up to 1.5 lakh in a year under section 80c.
ELSS funds are multi cap funds which means they can invest without any hindrance despite the company’s size and sector.
There are two benefits of this approach –
- One is you will get a diversified portfolio which lowers your risk
- and second is, you invest in those sectors that are actually advancing India.
How We Shortlisted These 7 Top ELSS Funds
Now that you know what ELSS funds are, let’s talk about how we shortlisted these 7 funds.
The very first thing we did, was to analyse all 38 ELSS funds Then we checked those funds that had at least 3 year history.
With this, 34 funds remained in the list After that, we evaluated the performance of funds under different time frames We also analysed how these funds perform in the falling markets.
Good downside protection i.e. loss control when the market falls, is a hallmark of a good fund.
We dug deeper and evaluated each fund’s performance against its benchmark, just to analyse that for how many times and with what margin it beats its own benchmark.
And lastly we checked the return of every fund in comparison to the ELSS category average.
Before arriving at any final selection we evaluated keenly each and every fund on these parameters.
List of 7 Best ELSS Funds
Are you ready to know which are those 7 funds? They are –
- Axis Long Term Equity Fund,
- DSPTax Saver Fund,
- Invesco Tax Saver Fund,
- Kotak Tax Saver Fund,
- Canara Robecco Equity TaxSaver Fund,
- Mirae Tax Saver Fund
- Motilal Oswal Long Term Equity Fund
Axis Long Term Equity
This fund was launched in 2009 and now has become one of the biggest fund of the ELSS category.
This fund invests 65-75% of its portfolio into the large caps i.e. in India’s top 100 companies. rest 25-30% in mid-sized companies and remainingportion in small companies.
The return consistency of this fund is its hallmark and in the last 10 years of its history, only for one year it gave less returns in terms of category and benchmark.
However this fund has not witnessed a big correction like 2008 but in 2011 and 2018 when the market was falling; it contained its losses in quite an impressive manner.
If we talk about its return, then for 10 years the average annual return of this fund has been 17.91%.
At the same time the 7-year and 5-year returns are 19.95% and 11.61% respectively.
Invesco Tax Saver
The Invesco Tax Fund was launched in 2006 and it follows the strategy of growth at areasonable rate.
This fund has been navigating beautifully both – the increasing markets and falling markets. So when in 2008, 2011 and 2018 the market fell, the losses of this fund were less than average and benchmark category.
Also in the rising market of 2010 and 2014 it offered more returns than the average and benchmark category.
Since inception, Invesco Tax saver Fund has given 14.01% of average annual returns. And its 7-year returns are 16.24%, which is around 3% more than the average category.
This fund is a great option in long term investment because of its growth at a reasonable rate strategy.
DSP Tax Saver
The DSP Tax Saver Fund was launched in 2007. This fund uses a combination of growth and value investing styles and switches in both according to the market.
Since its launch, DSP Tax Saver Fund has givenan average annual returns of 13.55%, and its 5-year and 7-year returns are 16.10% and 10.61% respectively, which is about 3% higher than the category average.
This fund is one of the most consistent performersin the ELSS category. Hence if you are looking for a reliable optionthen you should consider this.
Kotak Tax Saver
Kotak Tax Saver was launched in 2005 and since inception, it has given an average annualreturns of 11.80%.
This fund follows the flexicap approach whichmeans that it is not biased towards similar sized companies.
It has been increasing its allocation in mid-sizedand small companies in recent times. And today about 45% of money is invested insmall and mid-size companies and the rest is invested in large caps.
When we talk about 7-year returns of thisfund, its 13.99% and 5-year returns are 9.56%.
Mirae Tax Saver Fund
Mirae Tax Saver is a relatively new entrant in the ELSS category. It was launched in 2015.
This fund maintains about 65%-70% allocation in India’s top 100 companies and invests the rest in mid-sized companies.
Talking about the returns of this fund, we see that since launch it has beaten its benchmark and category returnsby a big margin.
It’s 3-year returns is 14.60% which is 5%higher than the average category. Not only this, during the 2018 market correction,it contained its losses well.
This is pretty impressive but due to its small track record, its performance consistency across market cycles is still not known.
Canara Robeco Equity Tax Saver
This fund was launched in 1993 and it is one of the oldest ELSS Funds.
This fund invests maximum money in India’stop 100 companies. The downside protection capability of this fund is considered to be one of the best.
In the year 2008, 2011 and 2018 during market corrections, this fund fell below category and benchmark.
In 2018 when the overall average returns inthe ELSS category were negative, this fund gave positive returns.
In terms of returns generated since launch,Canara Robeco Equity Tax Saver has delivered an annual average returns of 14.61% and its 7 and 5 year returns are 13.91% and 9.17% respectively.
Motilal Oswal Long Term Equity
Motilal Oswal Long Term Equity is also a relatively new entrant. It was launched in 2015.
This fund uses the QGLP – Quality, Growth, Longevity, and Price framework for stock selection.
And once the stock is picked, it holds itfor a long period. This fund has performed very well in its shorthistory and its 5-year returns is 13.73% which are the highest returns in the ELSS categoryin this period.
These are the 7 ELSS funds handpicked by us. You have witnessed yourself that all these funds have delivered good returns in the long-term.
However, they all have different approaches. So, if you want to go in for an aggressive strategy, you can pick Kotak Tax Saver Fund.
But if you prefer stability, then DSP Tax Saver Fund and Invesco Tax Saver Fund are good choices.
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