As the financial year, 2018-19 is inching towards the end, it is that time of the year again when the taxpayers are busy finalizing their tax-saving investments. As usual, Equity Linked Savings Schemes ( ELSS ) are on the shopping list of many discerning investors looking to save taxes.
ELSS are an excellent way to grow your money and save tax at the same time. Like any other equity mutual fund, the best way to invest in ELSS is through the Systematic Investment Plan (SIP) mode. You should plan ahead and spread your investments throughout the year to reduce the risk of entering the market at a wrong time.
The primary purpose of every ELSS investment should be to achieve a future financial goal or to create long-term wealth for distant goals like retirement planning etc. and tax saving in the year of investment should be an incidental benefit or a secondary objective.
Here are the best ELSS funds you can invest in for FY 2019.
Amongst all the tax savings schemes this is the only one which gives full exposure to equity. Even though ELSS has some risk involved, but with minimal lock-in period, it has emerged as the most attractive tax saving vehicle today. The only 3 ELSS mutual funds you need to invest in are :
This is an Open Ended ELSS fund with a lock-in of 3 years and launched on March 06, 2008. It is a fund with moderately high risk and has given a return of 25.65 % since its launch.
Returns per annum over the years from this fund are:
Duration | Returns |
1 year | 26.63 % |
3 years | 11.25 % |
5 years | 22.58 % |
Here are the key features of Aditya Birla SL Tax Relief 96
About Fund Manager :
This fund is managed by Mr. Ajay Garg since Oct 2006.
Experience: Prior to joining Birla Sun Life AMC in 2003 he has worked with Birla Sun Life Securities Ltd.
Funds Managed :
Analysis :
One of the oldest ELSS funds, this fund sported a three-star rating for many years but has shown improvement in performance since 2014, climbing to a five-star rating recently.
The fund follows a multi-cap strategy. The strategy is bottom-up and uses a 360-degree view of a company in order to invest in compelling businesses, without any market-cap bias.
The investment philosophy of the fund is to invest in quality companies. It hunts for companies run by professional management, which have the predictability of earnings and strong moats. The portfolio reveals quite a few unconventional mid-cap picks as top holdings. The fund’s quality bias has also led to a number of MNC stocks figuring among stock choices.
This fund is one of the best ELSS fund available in the market which you can invest in with minimum SIP of ₹500. Associate with this fund, if you are thinking of investing in ELSS for a longer duration.
This is an ELSS launched on September 21, 2005. It is a fund with moderately high risk and has given a return of 15.77 % since its launch.The scheme aims to generate long-term capital appreciation from a portfolio that is invested predominantly in equity and equity related instruments.
Returns per annum over the years from this fund are :
Duration | Returns |
1 year | 17.48 % |
3 years | 6.91 % |
5 years | 22.56 % |
Here are the key features of Reliance Tax Saver Fund :
About Fund Manager :
This fund is managed by Mr. Ashwani Kumar since Oct 2006.
Education: Mr. Kumar is a B.Sc and MBA in Finance.
Experience: Prior to joining Reliance Mutual Fund he has worked with Zurich Asset Management Co. Ltd.
Funds Managed :
Analysis :
An aggressive performer in the ELSS category, this fund has alternated between chart-busting returns and a moderate show.
The fund has seen substantial swings in its market cap allocations over the years. Large-cap weights were below 40% until 2015, but have been steadily pegged up to 60% in the last one year. Mid-caps, which were taking up a 40% plus weight in the portfolio a year ago, are now down to 25 to 30%, with small caps occupying about 15% of it.
The fund sets aside 20 to 30% of the portfolio for multinational companies with robust fundamentals. It follows a blend of growth and value investing.
This fund is one of the best ELSS fund available in market which you can invest in with minimum SIP of ₹ 500. Associate with this fund, if you are thinking of investing in ELSS for a longer duration, say 5-7 years.
This is an ELSS launched on December 28, 2008. It is a fund with moderately high risk and has given a return of 20.95 % since its launch. The scheme seeks to build a diversified portfolio comprising of stocks of companies with strong fundamentals that are available at reasonable valuations.
Returns per annum over the years from this fund are :
Duration | Returns |
1 year | 30.97 % |
3 years | 11.89 % |
5 years | 21.80 % |
Here are the key features of IDFC Tax Advantage Fund :
About Fund Manager :
This fund is managed by Mr. Daylynn Gerard Paul Pinto since Oct 2016
Education: Mr. Pinto is a B.Com (H) and PGDM.
Experience: Mr. Pinto has an experience spanning over 12 years in the mutual fund industry. Prior to joining IDFC AMC he was associated with UTI AMC (Jul 2006-Sep 2016) as the fund manager.
Funds Managed :
Analysis :
Launched in 2008, IDFC Tax Advantage Fund, is a ELSS fund which has consistently outperformed its benchmark since its inception and has provided high returns over the years among ELSS funds.
This is a fund which has earned its stripes by beating its benchmark every year except in the year of its launch in 2009.
This is a very aggressive fund in the ELSS category. The portfolio shows a 15 to 20% allocation to small caps constantly with mid caps making up anywhere between 25 and 40% of the portfolio. Large caps account for the residual portion.
The fund is managed on the basis of a growth at a reasonable price philosophy. It takes both cash and debt calls on occasion, though the cash position is fairly low at present. The fund identifies companies based on a deep understanding of the industry growth potential and interaction with management.
Don’t just run for returns from investment for investing in mutual funds. There are a lot of factors you should look into before selecting a fund which will match your investment goals.
Following the 3 things you should always remember before investing in Mutual Funds :
To ensure that the fund is in good hands, choose a fund house having fund manager with a good amount of experience managing small/mid cap funds and associated with these funds for some good numbers of years.
Also, one should actively consider allocating regularly to ELSS funds. You may even choose to invest large amounts, above your tax deduction limit, but be mindful that your investment will not be accessible, and to that extent unchangeable, for the first 3 years of lock-in. Also, keep in mind, allocation to equity is most efficient over a period of more than 5-7 years.
To look at some of the best performing funds from every category of mutual funds.
Happy Investing!
Disclaimer: the views expressed here are of th author and do not reflect those of Groww.