The financial year end of 2018-2019 is approaching. Now is the perfect time to invest in an equity linked savings scheme plan or an ELSS tax saving mutual. Investment in an ELSS plan entitles you a tax deduction up to INR 1.5 lakh under Sec 80C of the Income Tax Act, 1961. Apart from saving tax, these mutual funds also provide an excellent opportunity to generate wealth over the investment horizon. Additionally, an ELSS is the only investment instrument which comes with a minimum lock-in period of 3 years.
An ELSS fund primarily invests in equities of the stock market. Hence, you have higher chances of making good money in the long run.
If you want to save tax, read more below. We have created a list of best ELSS plans to help you select your tax saving instrument.
This is one of the best ELSS mutual funds offered by Aditya Birla Sun Life Mutual Fund. It is for investors who want to remain invested for long-term capital growth. With a primary composition in equity (80%) and the remainder in debt securities, this fund has had a growth of 40% since the past year.
| Type | Open/ELSS |
| Benchmark | S & P BSE 200 TRI |
| Returns % 1yr | 0.25 |
| Returns % 3yrs | 13.78 |
| Returns % 5yrs | 20.64 |
| Fund Manager | Ajay Garg |
| Asset Size (Crores) | 16646 |
One of the top most performing ELSS funds in the market. It has delivered more than 23% in returns over the last 5 years. Axis Long Term Equity Fund is very popular among investors who seek investment for tax saving.
| Type | Open/ELSS |
| Benchmark | S & P BSE 200 TRI |
| Returns % 1yr | 5.49 |
| Returns % 3yrs | 12.27 |
| Returns % 5yrs | 20.10 |
| Fund Manager | Jinesh Gopani |
| Asset Size (Crores) | 16467 |
This fund aims to generate long term capital appreciation by investing in equities and equity related instruments.
| Type | Open/ELSS |
| Benchmark | S & P BSE 200 TRI |
| Returns % 1yr | -3.48 |
| Returns % 3yrs | 12.49 |
| Returns % 5yrs | 16.59 |
| Fund Manager | S. N. Lahiri |
| Asset Size (Crores) | 3176 |
It is a recently launched ELSS plan in 2015. The fund is heavily invested in large and mid-size companies and has shown excellent performance since its inception.
| Type | Open/ELSS |
| Benchmark | NIFTY 500 TRI |
| Returns % 1yr | - 4.82 |
| Returns % 3yrs | 14.21 |
| Returns % 5yrs | NA |
| Fund Manager | Gautam Sinha Roy / Snigdha Sharma |
| Asset Size (Crores) | 1048 |
Founded on Dec 2, 2001, this fund comes in both direct and growth options.
| Type | Open/ELSS |
| Benchmark | NIFTY 500 TRI |
| Returns % 1yr | - 0.53 |
| Returns % 3yrs | 14.13 |
| Returns % 5yrs | 16.17 |
| Fund Manager | Chirag Setalvad |
| Asset Size (Crores) | 1418 |
The Invesco India Tax Plan was launched on Dec 29, 2006 and since then has delivered between 15.2% to 23.2% in CAGR. The fund is primarily invested in mid-cap/small cap and the remainder in debt. The investment objective is to generate long term capital by investing in equity related securities across all market capitalizations.
| Type | Open/ELSS |
| Benchmark | S & P BSE 200 TRI |
| Returns % 1yr | 1.98 |
| Returns % 3yrs | 11.92 |
| Returns % 5yrs | 18.41 |
| Fund Manager | Amit Ganatra / Dhimant Kothari |
| Asset Size (Crores) | 668 |
This fund has successfully beaten its benchmarks for the past 5-10 years. It began its investments primarily in the small and mid-cap companies but now it has shifted to large cap companies. The Reliance Tax Saver Fund has delivered a CAGR between 10%-23% over the past 3-5 years.
| Type | Open/ELSS |
| Benchmark | S & P BSE 100 TRI |
| Returns % 1yr | -18.94 |
| Returns % 3yrs | 5.97 |
| Returns % 5yrs | 17.36 |
| Fund Manager | Ashwani Kumar |
| Asset Size (Crores) | 9496 |
Franklin India Taxshield Fund is one of the top performing funds of India for the past 20 years. It has delivered up to 57 times of its original investments and has survived market crashes. With respect to its benchmark index, this fund has outperformed for 5|7|10 years respectively.
| Type | Open/ELSS |
| Benchmark | NIFTY 500 TRI |
| Returns % 1yr | -1.31 |
| Returns % 3yrs | 8.81 |
| Returns % 5yrs | 16.22 |
| Fund Manager | Lakshmikanth Reddy / R. Janakiraman |
| Asset Size (Crores) | 3553 |
If you want to select the best mutual funds in the market, the first thing needed is basic research about the equity market. So read as much as you can.
One you know the basics, it is time to learn how the stock market functions, namely BSE and NSE.
Understanding the capital markets will help you analyze how a fund generates its market related returns.
To make it easier, you can always take a quote from a professional manager/bank or AMC as it is not everyone’s talent to understand the complexities of the capital markets.
Now you can look in to tax saving ELSS funds as a specific category.
Remember, all tax saving ELSS plans have a minimum lock-up period of 3 years.
Go through the list of ELSS plans mentioned above, then you can select the ones you seek for subscription.
It is advisable that you invest in multiple schemes via SIP as this will further counter risk and entitle you the benefit of rupee cost averaging.
In this way, if one fund does not generate good returns, you still have another which might outperform.
Which is the best mutual fund to invest in?
There is no single best mutual fund, there are multiple across the Indian market. Depending on your appetite for risk and funds in hand, you can select a bunch of top performing mutual funds across India.
Which mutual fund is best for short term?
For short term investment, you can look into debt and liquid funds who have a duration between 90 days to one year. To name a few - Axis Liquid Fund, Principal Cash Management Fund, Indiabulls Liquid Fund, Kotak Savings Fund, etc.
How do beginners invest in Mutual Funds?
As a beginner, it is advisable you invest in a mutual fund with a help of an advisor or AMC. They come with well-versed financial professionals who do not charge any personal fee.
Is it a good time to invest in mutual funds?
Investing in mutual funds is usually a safe way and you can do so anytime! Simply because, your financial goals should be your aim rather than merely depending on the market conditions. Another option is to invest when the market is down as you will be able to purchase more units of a mutual fund due to decline in the value of the NAV.
Is ELSS taxable after 3 years?
Yes, an ELSS will attract a Long Term Capital Gains Tax of 10% post 3 years of investment.
Is ELSS good for long term investment?
Yes, an ELSS is an excellent instrument for long term instrument. With an ELSS, you can get a dual benefit of long term capital appreciation and tax benefits.
