Top 10 ELSS Funds In India: ELSS funds are equity funds that invest a major portion of their corpus into equity or equity-related instruments. ELSS funds are also called tax saving schemes since they offer tax exemption of up to Rs. 150,000 from your annual taxable income under Section 8C of the Income Tax Act.
Features of ELSS Mutual Funds
- A minimum of 80% of the total investible corpus is invested in equity and equity-related instruments.
- The fund invests in equity in a diversified manner – across different market capitalizations. Themes and sectors.
- There is no maximum tenure of investment. However, there is a lock-in period of three years.
- Tax exemption on the invested amount under Section 80C of the Income Tax Act.
- Income is treated as LTCG and taxed according to the prevalent tax rules.
Top 10 ELSS Funds In India
An ELSS fund is an equity-oriented scheme with a mandatory lock-in period of three years. In recent years, many taxpayers have turned to ELSS schemes to avail themselves of tax benefits. If you invest in ELSS schemes, you can avail of tax exemption of the invested amount up to a limit of Rs. 150,000. Further, the income you earn under this scheme at the end of the three-year tenure will be considered Long Term Capital Gain (LTCG) and taxed at 10%.
|Fund Name||Returns (%)|
|1 year||3 year||5 year||7 year||10 year|
|Axis Long Term Equity||46.34||11.58||14.71||17.54||16.77|
|Mirae Asset Tax Saver||63.49||14.91||19.86||—||—|
|Invesco India Tax Plan||50.14||9.99||13.69||15.98||13.99|
|Aditya Birla Sun Life Tax Relief 96||39.62||5.38||11.68||15.35||12.6|
|DSP Tax Saver||58.77||11.57||14.74||16.72||13.99|
|Kotak Tax Saver||55.06||12.29||14.46||16.31||11.97|
|ICICI Prudential Long Term Equity||53.39||9.55||12.16||13.68||12.55|
|Motilal Oswal Long Term Equity||47.74||5.94||14.45||—||—|
|Tata India Tax Savings||50.8||8.27||13.11||15.89||13.41|
|Nippon India Tax Saver||53.86||0.38||6.66||11.28||10.95|
|Benchmark(S&P BSE 500 TRI)||60.58||10.36||14.23||13.9||11.28|
|ELSS category average||53.36||8.14||12.7||14.23||12.08|
No.1 Axis Long Term Equity Fund
- Invests in quality businesses with a long term approach
- Uses bottom-up approach for stock picking
- Can invest across market capitalization, usually in a mix of large caps (around 50-100%) and select midcaps (up to 50%)
- Quality and long-term earnings growth prospects are also used for stock selection.
- Uses a research process based on fundamentals to analyze the growth potential of stocks having strong business models and sustainable competitive advantages over their competitors.
No.2 Mirae Asset Tax Saver Fund
- Aims at building a diversified portfolio of strong growth companies at a reasonable price across market capitalization, themes, and investment styles
- Uses a bottom-up approach for stock selection driven by value investing in growth-oriented businesses
- Investment decisions are based on broad analyses of the macroeconomy, business cycles, and industry trends.
- Prefers companies with high return ratios, robust business models, and sustainable competitive advantages over their competitors
- It aims to invest in a large base of stocks to avoid concentration risk
- Monitors the trading volumes of identified stocks before investment to avoid liquidity risk.
No.3 Invesco India Tax Plan
- Invests across market capitalization and sectors with a long term perspective
- Uses bottom-up approach for stock selection with a growth bias
- Prefers companies growing their businesses on a profitable and sustainable basis and available at a reasonable price
- Uses capitalization bias, stock selection, and sector allocation to generate alpha.
- It is an American Independent Investment Management Company.
No.4 Aditya Birla Sun Life Tax Relief 96
- Uses a combination of bottom-up and top-down approach for stock selection
- The top-down approach helps in analyzing changing economic trends, key policy changes, macroeconomic factors, infrastructure spending, etc
- The bottom-up approach identifies companies with a strong competitive position in good businesses and stable management focused on long-term fundamental growth.
- It is formerly known as Birla Sun Life Asset Management Company Limited.
- It is an investment managing company registered under the Securities and Exchange Board of India.
No.5 DSP Tax Saver
- Uses multi-cap strategy of investing with a longer investment horizon
- Seeks portfolio diversification across sectors and styles to create a durable portfolio
- Invests in established and emerging businesses to provide a combination of stability and growth
- It follows a combination of top-down sector allocation and bottom-up stock selection approaches
- Uses a blended analysis of valuation support and growth drivers for stock selection
- Constantly monitors prospects and price targets for investment decisions.
No.6 Kotak Tax Saver
- Uses a bottom-up approach for stock selection across market capitalization
- Invests in stocks priced at a material discount to their intrinsic value
- Prefers companies with strong financials, reputed management, and relatively less susceptible to recession or business cycles
- Also prefers companies with strategies to build strong brands and franchises.
- It is a wholly-owned subsidiary of Kotak Mahindra Bank Limited.
- KMAMC started operations in December 1998 and has approximately 74 Lac investors in various schemes.
No.7 ICICI Prudential Long Term Equity Fund
- Selects stocks with a long term view
- Follows a value-based approach during the stock selection
- Focuses on companies’ business fundamentals, quality of management, financial strength, key earnings drivers, and industry structure during stock selection.
- It is the second-largest asset management company in India.
- ICICI Prudential Mutual Fund was established in 1993.
- It is a joint venture between ICICI Bank in India and Prudential PLC, one of the UK’s largest financial services sectors.
No.8 Motilal Oswal Long Term Equity
- Follows an investment style and philosophy based on the ‘Buy Right: Sit Tight’ principle.
- ‘Buy Right’ refers to buying quality stocks at a reasonable price
- ‘Sit Tight’ refers to remain invested for a longer time to realize the maximum growth potential
- Follows bottom-up approach for stock selection
- Uses a benchmark agnostic approach to build a portfolio consisting of high conviction stock ideas and low portfolio churns
- Believes inadequate diversification with less number of stocks.
No.9 Tata India Tax Savings
- Uses a blend of growth and value styles of investment
- The stock selection process is driven by fundamental research
- Uses 5-point evaluation criteria for identifying stocks — efficient use of capital, earnings growth prospects, valuation, liquidity, and corporate governance.
- It is an open-ended Equity Linked Tax Saving Scheme (ELSS) with a compulsory lock-in period of 3 years.
- The fund offers a dual advantage of Tax Benefit of Rs. 1,50,000 u/s 80C of the Income Tax Act and the long-term upside potential of the Indian equity market.
No.10 Nippon India Tax Saver
- It aims at generating sustained long-term growth.
- Offers an optimal mix of defensive and cyclical themes.
- Investment philosophy as of May 2020 —
- Maintains balance between large-cap and mid-cap
- Invest in companies with high growth prospects over the medium term (2-3 years.
- Takes 2 or 3 sector calls at a time in line with emerging market trends
- A small proportion is invested in contrarian calls
- Significant exposure to MNCs and high conviction mid-cap companies.
Tips for investment in ELSS funds
- Compare the past performance of 3-, 5- and 7-year periods while making fund selection. While no one guarantees past performance in the future, comparing their past returns can help in depicting how they coped with various market conditions.
- Don’t wait for the last quarter or month of the financial year to invest in ELSS. High valuations in the equity market at that time, if any, would cost you more for the ELSS fund units. Instead, opt for the SIP option to spread your investments across the year and benefit from cost averaging during a market correction, if any, in the interim.
- Don’t opt for the dividend option. Instead, opt for the growth option to benefit from the power of compounding. Dividends are also taxable at the hands of investors as per their tax slabs.
- Opt for the direct plan for higher returns. As direct plans have a lower expense ratio than growth plans, the savings generated remains invested in the fund itself, generating higher returns over the long term.
Final Thought (Top 10 Elss Funds In India)
Based on the research, here is the list of the top 10 ELSS funds in India. We have talked about the best tax saver in India and in which they are sustained. We have classified these tax savers based on their offers, price, and policies.
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