I had invested 1.5 lac in Axis long term equity fund in 2014. The lock-in period is over now. Should I redeem or continue to keep invested?
AskedInvestment in a particular fund is primarily a function of the return and risk appetite of the investor, which in turn is governed by the investment objective of the investor.
Equity Linked Savings Scheme or ELSS is a type of mutual fund wherein a major portion out of the total fund is invested in equity and related products. As evident from the name of the scheme, it comes with a benefits attached to it, in the form of tax savings. Two important features of the ELSS scheme are lock-in period and Net Asset Value (NAV) or price of the fund which is declared at the end of each business day.
General advice on when to redeem is to take a look at the performance of the fund before one chooses to redeem. If the fund has been performing well and matches ones risk appetite, it might be better to remain invested in the fund and not redeem. If on the other hand, one wants to reduce ones exposure to risk or feel there are other funds or schemes where one can invest and earn a higher return, it would be a good idea to redeem the amount and reinvest somewhere else.
For ELSS, investor should consider withdrawing and re-investing in either better performing ELSS if your 1.5 lac limit under section 80C is not exhausted. If one has already invested enough for 80C, one can re-invest accessing market situation.
ELSS is a dedicated mutual fund scheme that allows investors to save tax. It also provides an opportunity for long term capital appreciation. Being a multi-cap fund, ELSS fund manager invests in a diversified portfolio, predominantly consisting of equity and equity related instruments that carry high-risk and have the potential to deliver high-returns.
So, if ELSS is performing well and is at par to your investment goals then don’t redeem it. But it is not meeting your investment expectations and there is better funds available in market in same category then redeem and invest in better funds. 3 years is a long time, and market may behave totally different in that span of time.
For ELSS, you should consider withdrawing and re-investing in either better performing ELSS if your 1.5 lac limit under section 80C is not exhausted. If you have already invested enough for 80C, you can re-invest accessing market situation.
If you want to invest in ELSS, these are popular ELSS for 2017:
Reliance Tax Saver (ELSS) Fund
IDFC Tax Advantage (ELSS) Fund
Aditya Birla Sun Life Tax Relief 96
If you want to invest in other multi cap fund, these are some popular multi cap funds for 2017:
Motilal Oswal MOSt Focused Multicap 35 Fund
Aditya Birla Sun Life Equity Fund
Franklin India High Growth Companies Fund
Happy Investing!
ELSS funds are mostly Multi-cap Equity Funds. They invest 50-70% in Large Cap and rest in mid/small cap funds. In a good performing markets, they continue to perform well.
General advice on when to redeem is to take a look at the performance of the fund before you choose to redeem. If the fund has been performing well and matches your risk appetite, it might be better to remain invested in the fund and not redeem. If on the other hand, you want to reduce your exposure to risk or feel there are other funds or schemes where you can invest and earn a higher return, you can redeem the amount and reinvest somewhere else.
For ELSS, you should consider withdrawing and re-investing in either better performing ELSS if your 1.5 lac limit under section 80C is not exhausted. If you have already invested enough for 80C, you can re-invest accessing market situation. Just have a word with a Groww Expert to choose good funds considering current market.