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Best ELSS Mutual Funds

Equity Linked Savings Scheme (ELSS) schemes a majority of the fund corpus in equity and equity-related instruments and feature a lock-in period of 3 years. After this period is over, an ELSS scheme converts into an open-ended scheme. 

Under section 80C of the Income Tax Act 1961, investments of up to Rs.1.5 lakh in ELSS funds are eligible for a tax deduction. The primary objective of the best ELSS mutual funds is to maximise portfolio return over a long term while offering tax benefits.

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Top 10 Elss Mutual Funds

Fund NameCategoryRisk1Y ReturnsRatingFund Size(in Cr)
Quant Tax Plan FundEquityVery High96.0%5star433
Mirae Asset Tax Saver FundEquityVery High63.5%5star9,832
Canara Robeco Equity Tax SaverEquityVery High59.9%5star2,772
BOI AXA Tax Advantage FundEquityVery High64.7%4star517
DSP Tax Saver FundEquityVery High66.8%4star9,756
JM Tax Gain FundEquityVery High65.1%4star65
Axis Long Term Equity FundEquityVery High61.9%4star34,371
IDFC Tax Advantage (ELSS) FundEquityVery High80.3%4star3,439
Kotak Tax Saver FundEquityVery High54.9%4star2,296
Invesco India Tax PlanEquityVery High58.6%4star1,890
PGIM India Long Term Equity FundEquityVery High64.0%4star351
Union Tax Saver SchemeEquityVery High60.8%3star436
UTI Long Term Equity Fund (Tax Saving)EquityVery High61.8%3star3,041
BNP Paribas Long Term Equity FundEquityVery High48.2%3star551
Tata India Tax Savings FundEquityVery High56.4%3star2,953
View All Top 10 Elss Mutual Funds

Features of ELSS Mutual Funds

Here are some features of ELSS mutual funds:

Asset allocation: As per SEBI guidelines, ELSS must allocate at least 80% of their investment corpus to equity shares. 

Risk-reward ratio: Since top ELSS mutual funds primarily invest in stocks, the performance of these schemes is impacted by volatile market conditions. Hence, risk levels associated with these funds are extremely high. At the same time, this exposure to equity enables them to potentially generate higher returns than other investment options, such as fixed deposits or debt funds.

Taxability

Long-term capital gains: Since ELSS schemes involve a lock-in period of 3 years, all gains from it are classified as LTCG. Thus, proceeds from the sale of ELSS units in excess of Rs. 1 lakh attract a 10% tax.

TDS: Dividends realised from ELSS schemes above Rs.5000 are eligible for 10% TDS

Tax exemption: As already mentioned, investments of up to Rs.1.5 lakh in the best ELSS mutual funds are deducted from a person’s total taxable income in any FY.

Who Are These Funds Suited For?

The best ELSS mutual funds 2021 are suited for saving tax while maximising portfolio returns. After all, these fund schemes principally invest in stocks, which allows them to generate substantial yields in comparison to other investment avenues like debt-oriented schemes or FDs. However, it’s riskier than those investment options because of extensive investments in equity shares. That said, investors must consider certain aspects before deciding which is the best ELSS mutual fund for them. 

Financial goal: There are no readymade solutions when it comes to investing. While one scheme might be perfect for an investor, another plan may not be the ideal option for them. Hence, individuals must identify their investment objectives before buying ELSS units. 

Investment time horizon: ELSS funds come with a lock-in period of 3 years, meaning investors cannot redeem their units within that timeframe. Hence, it’s vital for investors to take this factor into account before parting with their savings. 

Risk appetite: Tax saver funds are exposed to volatile market conditions owing to their underlying securities. Hence, these schemes are associated with high risk. Investors must make sure to assess their risk profile before they decide to invest in this type of mutual fund scheme. 

Expense ratio: This refers to the yearly maintenance charge imposed by a fund house on investors to manage a scheme. One should compare the expense ratio of different tax saver funds before investing in one. 

Fund’s past performance: Investors must make sure to check returns generated by a fund over a trailing 3-year and 5-year period and longer if necessary. It helps investors understand how a specific scheme has performed in response to various market conditions. This way, they can know whether a plan is being able to achieve its predetermined objective. Nonetheless, any scheme’s previous performance might not accurately represent how it can deliver in the future. 

Fund manager’s experience: The performance of the best ELSS mutual funds is impacted by a fund manager’s decisions. They buy or sell the underlying stocks based on thorough research and analysis. Hence, it’s crucial to check their track record before allocating funds to a tax saver scheme. This assessment is particularly essential because investors cannot withdraw their investments from an ELSS scheme even through poor portfolio management. 

Direct and regular plan: AMCs offer two types of plans – direct and regular. The former doesn’t involve any broker or distributor as they are offered directly. Nevertheless, third parties participate in the latter case. Individuals must weigh in necessary costs before choosing one or the other.

Major Advantages

Here are some of the benefits of investing in the best ELSS mutual fund:

  • Shortest lock-in period: The 3-year lock-in period of ELSS mutual funds is the shortest among other tax-saving investment options. For example, PPF has a minimum maturity period of 15 years. Hence, tax-saver fund schemes are more liquid.
  • Potential to generate high returns: Contrary to ELSS mutual funds, other tax-saving investment options, like bank fixed deposits and PPF, generate a fixed income. Conversely, ELSS funds invest in stocks of different companies, and their NAV fluctuates accordingly. An uptick in prices of such underlying securities can yield sizeable returns for investors. 
  • Tax benefit: Investments up to Rs.1.5 lakh are eligible for tax deductions as per the provisions of the Income Tax Act

Investment modes: Two routes via which individuals can invest in the best ELSS mutual funds are – Systematic Investment Plan and lump-sum. SIP allows individuals to invest in a scheme by paying fixed instalments at regular intervals (monthly, quarterly, annually, etc.). On the flip side, the lump-sum method allows investors to allocate the available funds to an ELSS mutual fund scheme in one go.

Let's have a closer look

Now let us jump and check about these top 10 mutual fund schemes.

Quant Tax Plan Direct Growth

Fund Performance: This fund has given 39.27% annualized returns in the last three years. In the last year, its returns were 95.97%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 95.97% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹500. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹500
AUM433Cr
1Y Returns96.0%

Mirae Asset Tax Saver Fund Direct Growth

Fund Performance: This fund has given 29.17% annualized returns in the last three years. In the last year, its returns were 63.48%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 63.48% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹500. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹500
AUM9,832Cr
1Y Returns63.5%

Canara Robeco Equity Tax Saver Direct Growth

Fund Performance: This fund has given 29.12% annualized returns in the last three years. In the last year, its returns were 59.93%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 59.93% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹500. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹500
AUM2,772Cr
1Y Returns59.9%

BOI AXA Tax Advantage Direct Growth

Fund Performance: This fund has given 32.57% annualized returns in the last three years. In the last year, its returns were 64.65%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 64.65% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹500. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹500
AUM517Cr
1Y Returns64.7%

DSP Tax Saver Direct Plan Growth

Fund Performance: This fund has given 27.4% annualized returns in the last three years. In the last year, its returns were 66.82%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 66.82% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹500. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹500
AUM9,756Cr
1Y Returns66.8%

JM Tax Gain Direct Plan Growth

Fund Performance: This fund has given 27.33% annualized returns in the last three years. In the last year, its returns were 65.13%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 65.13% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹500. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹500
AUM65Cr
1Y Returns65.1%

Axis Long Term Equity Direct Plan Growth

Fund Performance: This fund has given 26.11% annualized returns in the last three years. In the last year, its returns were 61.88%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 61.88% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹500. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹500
AUM34,371Cr
1Y Returns61.9%

IDFC Tax Advantage (ELSS) Direct Plan Growth

Fund Performance: This fund has given 25.85% annualized returns in the last three years. In the last year, its returns were 80.35%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 80.35% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹500. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹500
AUM3,439Cr
1Y Returns80.3%

Kotak Tax Saver Fund Direct Growth

Fund Performance: This fund has given 24.47% annualized returns in the last three years. In the last year, its returns were 54.88%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 54.88% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹500. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹500
AUM2,296Cr
1Y Returns54.9%

Invesco India Tax Plan Direct Growth

Fund Performance: This fund has given 24.31% annualized returns in the last three years. In the last year, its returns were 58.64%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 58.64% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹500. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹500
AUM1,890Cr
1Y Returns58.6%

PGIM India Long Term Equity Fund Direct Growth

Fund Performance: This fund has given 23.82% annualized returns in the last three years. In the last year, its returns were 64.03%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 64.03% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹500. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹500
AUM351Cr
1Y Returns64.0%

Union Long Term Equity Fund Direct Growth

Fund Performance: This fund has given 25.83% annualized returns in the last three years. In the last year, its returns were 60.84%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 60.84% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹500. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹500
AUM436Cr
1Y Returns60.8%

UTI Long Term Equity Fund Direct Growth

Fund Performance: This fund has given 24.39% annualized returns in the last three years. In the last year, its returns were 61.83%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 61.83% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹500. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹500
AUM3,041Cr
1Y Returns61.8%

BNP Paribas Long Term Equity Direct Growth

Fund Performance: This fund has given 24.11% annualized returns in the last three years. In the last year, its returns were 48.22%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 48.22% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹500. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹500
AUM551Cr
1Y Returns48.2%

Tata India Tax Savings Fund Direct Growth

Fund Performance: This fund has given 24.02% annualized returns in the last three years. In the last year, its returns were 56.37%. It has continually hit its benchmark in the Equity segment.

Why to invest: It is one of the most remarkable Equity mutual funds in India. This fund has constantly outperformed other similar funds, providing 56.37% returns in the last one year. Minimum lump sum investment amount required to invest in this scheme is ₹500. Minimum SIP investment amount required for this scheme is ₹500.

Min Investment Amt₹500
AUM2,953Cr
1Y Returns56.4%

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