Investing in Equity-Linked Savings Schemes (ELSS) is one of the best ways to save taxes while generating higher returns. ELSS mutual funds invest primarily in equity and equity-related instruments, making them ideal for long-term investments. With a lock-in period of three years, ELSS funds offer the dual benefit of tax savings and wealth creation. In this blog, we’ll take a look at the top ELSS mutual funds to invest in for higher returns.
- Axis Long Term Equity Fund: This fund has consistently delivered high returns over the years, making it one of the best ELSS funds to invest in. The fund has a diversified portfolio, with a mix of large-cap, mid-cap, and small-cap stocks. The fund’s top holdings include stocks such as HDFC Bank, Bajaj Finance, and Kotak Mahindra Bank.
- Mirae Asset Tax Saver Fund: This fund has a proven track record of generating high returns, with a focus on quality stocks. The fund’s portfolio is well-diversified, with a mix of large-cap and mid-cap stocks. The fund’s top holdings include stocks such as HDFC Bank, ICICI Bank, and Reliance Industries.
- Aditya Birla Sun Life Tax Relief 96: This fund has been a consistent performer in the ELSS category, delivering above-average returns over the years. The fund’s portfolio is well-diversified, with a mix of large-cap and mid-cap stocks. The fund’s top holdings include stocks such as HDFC Bank, ICICI Bank, and Infosys.
- DSP Tax Saver Fund: This fund has a well-diversified portfolio, with a mix of large-cap, mid-cap, and small-cap stocks. The fund has consistently delivered high returns over the years, making it a top pick in the ELSS category. The fund’s top holdings include stocks such as HDFC Bank, Kotak Mahindra Bank, and ICICI Bank.
- Kotak Tax Saver Fund: This fund has a diversified portfolio, with a mix of large-cap and mid-cap stocks. The fund has consistently delivered above-average returns over the years, making it a top pick in the ELSS category. The fund’s top holdings include stocks such as HDFC Bank, ICICI Bank, and Reliance Industries.
Investing in ELSS mutual funds is an excellent way to save taxes while generating higher returns. However, investors must remember that ELSS funds are subject to market risks, and it’s essential to invest in them with a long-term perspective.
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Frequently Asked Questions (FAQs)
Q. What are ELSS mutual funds, and how do they work?
ELSS mutual funds are equity-linked savings schemes that invest primarily in equity and equity-related instruments. These funds offer tax benefits to investors under Section 80C of the Income Tax Act, making them an excellent investment option for those looking to save taxes. ELSS funds have a lock-in period of three years, which means investors cannot redeem their investments before the completion of the lock-in period.
Q. What are the benefits of investing in ELSS mutual funds?
Investing in ELSS mutual funds offers several benefits, such as tax savings, high returns, and diversification. ELSS funds provide tax benefits of up to Rs. 1.5 lakhs under Section 80C of the Income Tax Act. ELSS funds also have the potential to generate higher returns compared to other tax-saving instruments like fixed deposits and Public Provident Fund (PPF). Moreover, ELSS funds invest in a diversified portfolio of equity and equity-related instruments, reducing the risk of investment.
Q. What should I consider before investing in ELSS mutual funds?
Before investing in ELSS mutual funds, you should consider several factors such as fund performance, fund manager’s track record, expense ratio, investment objective, and risk appetite. You should also check the fund’s asset allocation, portfolio diversification, and top holdings before investing.
Q. Which are the best ELSS mutual funds to invest in for higher returns?
Some of the best ELSS mutual funds to invest in for higher returns include Axis Long Term Equity Fund, Mirae Asset Tax Saver Fund, Aditya Birla Sun Life Tax Relief 96, DSP Tax Saver Fund, and Kotak Tax Saver Fund. These funds have consistently delivered above-average returns over the years, making them a top pick in the ELSS category.
Q. What is the lock-in period for ELSS mutual funds?
The lock-in period for ELSS mutual funds is three years. This means that investors cannot redeem their investments before the completion of the lock-in period. After the lock-in period ends, investors can choose to either redeem their investments or stay invested in the fund.
Q. Is it safe to invest in ELSS mutual funds?
Investing in ELSS mutual funds comes with a certain degree of risk as these funds primarily invest in equity and equity-related instruments. However, ELSS funds invest in a diversified portfolio of stocks, reducing the risk of investment. It’s essential to invest in ELSS mutual funds with a long-term perspective to mitigate market risks and generate higher returns.
