Best ELSS Funds to Invest in India

There is often a common misconception among investors who think that investing primarily in equity markets will lead to high taxes on their returns. Therefore, they invest in multiple fixed income schemes to avail tax benefits. In order to counter this common misconception, an investor can select an elss plan. An elss is an excellent investment option for obtaining the dual benefits of tax saving and wealth generation. Therefore, the best elss funds should be a part of your investment portfolio.

What are ELSS Mutual Funds?

The Equity Linked Savings Scheme (ELSS) are open-ended, diversified equity schemes offered by Mutual Funds Houses of India. A tax benefit is offered under Section 80C of the Income Tax Act, 1961 under this scheme. The ELSS funds schemes have not just become the most popular choice for saving but also double up as a feasible form of investment that provide a profitable return. Investments in the ELSS Mutual funds can be made, using both SIP (Systematic Investment Plan) and lump sum investment options. There is a lock-in period of 3 years and provides better liquidity compared to other options like National Savings Scheme and Public Provident Fund. Most of the industry professionals recommend ELSS mutual funds as one of the best Tax Saving instruments. Since such investments involve some amount of risks, it is good to familiarize with some of the best ELSS mutual funds one can invest in.

How is ELSS Mutual Fund different from other Investment Options?

Under an ELSS mutual fund scheme, you can claim a tax deduction of ₹1,50,000 under Section 80C of the Income Tax Act. This is the only type of mutual fund which entitles such a benefit.
You have the potential of earning higher returns over a longer investment horizon.
Gains from both the options of investment - growth and dividend - are completely tax free.
You can start with a minimum of ₹500 or a lump sum amount. There is no such limit on the maximum amount of investment.
The returns generated by an ELSS plan is market-linked.
The minimum lock-in period is 3 years, which is considerably less, as compared to PPF and NSC.

What are the Advantages of Investing in ELSS?

One can definitely reap a number of benefits by investing in ELSS funds as it is one of the most practical forms of investment. It is hard to believe that the minimum investment required for investment is as good as low as Rs. 500. That means if you consider that a person in the 30% tax bracket can invest up to 1.5 lakh, he can in turn save tax of Rs. 45,000 each year.

Best ELSS Funds to Invest in 2018

Axis Long Term Equity Fund

Type	Open ended ELSS
Benchmark	S & P BSE 200
Fund Manager	Jinesh Gopani
Risk	Moderately high
Asset size (Crores)	₹1504.73
Return % (1Yr)	2.5
Return % (3Yrs)	10.5
Return % (5Yrs)	22.5

Investment objective - To generate income and long-term capital appreciation from a diversified portfolio of predominantly equity and equity-related securities. However, there can be no assurance that the investment objective of the Scheme will be achieved.
Suitable for - Capital appreciation & generating income over long term.

Reliance Tax Saver Fund

Type	Open ended ELSS
Benchmark	S & P BSE 100 TRI
Fund Manager	Mr. Ashwani Kumar
Risk	Moderately high
Asset size (Crores)	₹9630
Return % (1Yr)	-16.46
Return % (3Yrs)	5.24
Return % (5Yrs)	19.24

Investment objective: The primary objective of the scheme is to generate long-term capital appreciation from a portfolio that is invested predominantly in equity and equity related instruments. However, there can be no assurance that the scheme’s investment objective shall be achieved.
Suitable for: Long term wealth generation and tax benefit.

Aditya Birla SL Tax Relief 96

Type	Open ended ELSS
Benchmark	S & P BSE 200 TRI
Fund Manager	Mr. Ajay Garg
Risk	Moderately high
Asset size (Crores)	₹6628
Return % (1Yr)	-0.06
Return % (3Yrs)	11.41
Return % (5Yrs)	20.44

Investment objective - Investment objective is to save tax while growing your money through Equity Investments
Suitable for - Investments in equity and equity related securities, with tax benefit under section 80C, subject to eligibility

DSP BR Tax Saver Fund

Type	Open ended ELSS
Benchmark	NIFTY 500 TRI
Fund Manager	ROHIT SINGHANIA
Risk	Moderately high
Asset size (Crores)	₹4373.17
Return % (1Yr)	-7.04
Return % (3Yrs)	9.93
Return % (5Yrs)	17.72

Investment objective - The primary investment objective of the Scheme is to seek 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 avail of a deduction from total income, as permitted under the Income Tax Act, 1961 from time to time.
Suitable for - Capital appreciation.

Franklin India Taxshield Fund

Type	Open ended ELSS
Benchmark	Nifty 500
Fund Manager	Lakshmikanth Reddy / R. Janakiraman
Risk	Moderately high
Asset size (Crores)	₹3651
Return % (1Yr)	-1.84
Return % (3Yrs)	7.10
Return % (5Yrs)	17.19

Investment objective - The primary objective for Franklin India Taxshield is to provide medium to long term growth of capital along with income tax rebate.
Suitable for - Long term capital appreciation.

Tata Tax Savings Fund

Type	Open ended ELSS
Benchmark	S & P BSE Sensex TRI
Fund Manager	Rupesh Patel / Ennette Fernandes
Risk	Moderately high
Asset size (Crores)	₹1417
Return % (1Yr)	-7.43
Return % (3Yrs)	9.76
Return % (5Yrs)	17.56

Investment objective - To provide income distribution and / or medium to long term capital gains while at all times emphasising the importance of capital appreciation.
Suitable for - Long term capital appreciation.

IDFC Tax Advantage ELSS Fund

Type	Open ended ELSS
Benchmark	S & P BSE 200 TRI
Fund Manager	Daylynn Pinto
Risk	Moderately high
Asset size (Crores)	₹1614
Return % (1Yr)	-4.69
Return % (3Yrs)	10.60
Return % (5Yrs)	17.85

Investment objective - The investment objective is to seek to generate long term capital growth from a diversified portfolio of predominantly equity related securities.
Suitable for - Investment predominantly in Equity and Equity related securities with income tax benefit u/s 80C and 3 years lock-in.

ICICI Pru Long Term Equity-Tax Svng-DP-G

Type	Open ended ELSS
Benchmark	NIFTY 500 TRI
Fund Manager	Mr. George Heber Joseph has been managing this scheme since April 2015
Risk	Moderately high
Asset size (Crores)	₹5386
Return % (1Yr)	6.84
Return % (3Yrs)	10.25
Return % (5Yrs)	18.61

Investment objective - An Equity Linked Savings Scheme that aims to generate long term capital appreciation by primarily investing in equity and related securities and provides tax benefit under section 80C of Income Tax Act, 1961.
Suitable for - Long term wealth creation solution.

How to Choose the Best Mutual Funds from the Market?

The first thing to do is research. You need to understand how the stock market works on a daily basis, this can only be achieved if you have done intensive research with respect to the stock market.
If you are unable to do so, it is alright. Usually there are fund managers who manage the fund on your behalf. You can also seek advice from a financial advisor.
You should look at an ELSS as a medium term investment scheme as it comes with a mandatory lock-in period of 3 ears. This means that you will not be able to withdraw your money invest for 3 years.
Keep an eye on the top 10 ELSS funds 2018 in India.
You need not invest all your money in a single scheme. Go for different schemes with a dividend or growth option.
The reason being, if one fund fails to meet your expectations, you still have another fund at hand. This leads to risk diversification.

Why is ELSS the best tax saving option for Investors?

The Equity Linked Saving Scheme comes with the shortest compulsory lock-in period of three years. The mutual funds invest mostly in stocks and this makes them the most flawless option to create wealth over a long period. Therefore, it is considered as one of the finest investment options to invest in. In case you hold on to your ELSS funds investments after the mandatory lock-in period and it is performing well, it can help achieve your financial goals.

Thus, one can always choose to invest in ELSS funds if you are looking for investment options. However, it is always preferable to research thoroughly before zeroing in on an option.

FAQs on Best ELSS funds to Invest

Which is the best mutual fund to invest?

There is no single best mutual fund to invest in. In fact, there are multiple funds with different benchmarks and parameters which perform well.

Which mutual fund should I invest for long term?

Any equity based mutual fund or an ELSS fund is a suitable option for long term.

Can I redeem ELSS before 3 years?

No, an ELSS funds carries a mandatory lock-in period of 3 years.

Can I invest more than 1.5 lakhs in ELSS?

Yes, you can invest more than ₹1.5 lakhs in an ELSS scheme. There is no limit on the amount of investment in a mutual fund.

Is ELSS a good investment option?

Yes, if you intend on making long term capital appreciation along with tax benefits, then an ELSS is a suitable option.

How is ELSS funds are different from other investment options?

ELSS funds are different from other investment options when it comes to the minimum lock-in period of 3 years and a tax benefit of ₹1,50,000 in comparison to a PPF or NSC.

How much tax benefit can be availed through investing in ELSS?

You can avail a tax benefit of up to ₹1,50,000 through investing in an ELSS plan.

Should my first mutual fund investment be in ELSS?

Yes, it is a suitable option for long term capital appreciation and tax benefits.

What are the disadvantages of ELSS?

The biggest disadvantage of an ELSS scheme is that it carries market related risk, which is not suitable for investors who have a low risk of appetite.

What are the other benefits of ELSS funds?

The other benefits of ELSS funds include - higher capital gains, long term wealth generation and the option to invest in equities.

Is the ELSS maturity amount taxable?

Yes, it will be subjected to a long term capital gains tax at 10%.

How to start an ELSS funds account?

First, you need to select a mutual fund of your choice. Next, you can either visit a fund house yourself or a distributor with the relevant KYC and bank details. You can also visit the official website of a respective fund house online.

How much should one invest in ELSS?

There is no limit to any amount for investing in an ELSS funds. You can put as much as you want as per your financial resources and appetite for risk.