As the tax-saving season approaches, many investors in India look for suitable options to invest in Equity Linked Savings Schemes (ELSS) to avail tax benefits under Section 80C of the Income Tax Act. ELSS mutual funds not only offer tax savings but also provide the potential for wealth creation through equity investments. However, with numerous options available in the market, it can be overwhelming to choose the right ELSS fund that suits your financial goals and risk appetite. To help you make an informed decision, here are some top-performing ELSS mutual funds that have consistently delivered impressive returns over the years.
Mirae Asset Tax Saver Fund
Mirae Asset Tax Saver Fund is one of the top-performing ELSS mutual funds that has gained popularity among investors for its consistent performance. The fund has a diversified portfolio of large-cap, mid-cap, and small-cap stocks, which allows it to capture opportunities across different market segments. With a 3-year annualized return of around 20% (as of March 2023), Mirae Asset Tax Saver Fund has outperformed its benchmark and peers, making it a preferred choice for long-term wealth creation.
Axis Long Term Equity Fund
Axis Long Term Equity Fund is another highly-rated ELSS mutual fund that has delivered impressive returns over the years. The fund follows a growth-oriented investment strategy and invests in a diversified portfolio of high-quality companies across various sectors. With a 3-year annualized return of around 18% (as of March 2023), Axis Long Term Equity Fund has consistently outperformed its benchmark and peers, making it a popular choice among investors.
Aditya Birla Sun Life Tax Relief 96
Aditya Birla Sun Life Tax Relief 96 is a well-known ELSS mutual fund that has a track record of delivering strong performance. The fund follows a multi-cap investment approach, which allows it to invest in companies across different market capitalizations. Aditya Birla Sun Life Tax Relief 96 has a 3-year annualized return of around 17% (as of March 2023), and it has consistently outperformed its benchmark and peers, making it a preferred choice for long-term wealth creation.
SBI Magnum Taxgain Fund
SBI Magnum Taxgain Fund is a popular choice among investors for its consistent performance over the years. The fund has a diversified portfolio of companies across different sectors and market capitalizations. SBI Magnum Taxgain Fund has a 3-year annualized return of around 16% (as of March 2023) and has consistently outperformed its benchmark and peers, making it a reliable option for long-term wealth creation.
HDFC Tax Saver Fund
HDFC Tax Saver Fund is another well-known ELSS mutual fund that has delivered strong performance over the years. The fund follows a diversified investment approach and invests in companies across different sectors and market capitalizations. HDFC Tax Saver Fund has a 3-year annualized return of around 15% (as of March 2023), and it has consistently outperformed its benchmark and peers, making it a popular choice among investors for tax-saving and wealth creation.
Remember, ELSS mutual funds have a lock-in period of three years, which means you cannot redeem your investment before three years. Therefore, it’s crucial to have a long-term investment horizon and not solely focus on short-term returns. Equity investments are subject to market risks, and past performance may not necessarily indicate future performance. It’s important to carefully review the fund’s investment strategy, portfolio holdings, and risk factors before investing.
Additionally, diversification is key to managing risk in your investment portfolio. It’s advisable to not invest all your tax-saving investments in a single ELSS fund but spread it across multiple funds to diversify your risk. You can consider investing in a combination of large-cap, mid-cap, and small-cap ELSS funds to diversify your investment across different market segments and increase the potential for wealth creation.
Conclusion:
In conclusion, ELSS mutual funds offer an excellent opportunity for tax savings and wealth creation through equity investments. The above-mentioned funds, including Mirae Asset Tax Saver Fund, Axis Long Term Equity Fund, Aditya Birla Sun Life Tax Relief 96, SBI Magnum Taxgain Fund, and HDFC Tax Saver Fund, are some of the top-performing ELSS mutual funds that have consistently delivered impressive returns over the years. However, it’s essential to do thorough research, assess your individual financial goals and risk tolerance, and consult with a financial advisor before making any investment decisions. Happy investing!
Read more useful content:
- How to invest in mutual funds
- Best Technology Mutual Funds
- All about mutual funds-types & importance
- The Power of SIP Investment in Mutual Funds
Frequently Asked Questions (FAQs)
What is an ELSS mutual fund?
ELSS stands for Equity Linked Savings Scheme. It is a type of mutual fund that invests primarily in equities and offers tax benefits under Section 80C of the Income Tax Act in India. ELSS funds have a lock-in period of three years, and a minimum of 80% of their assets are invested in equities.
How much tax benefit can I avail by investing in ELSS mutual funds?
Investments in ELSS mutual funds are eligible for tax deductions of up to Rs. 1.5 lakh per financial year under Section 80C of the Income Tax Act. This means that you can reduce your taxable income by up to Rs. 1.5 lakh by investing in ELSS funds.
Can I redeem my ELSS mutual fund investment before the completion of the lock-in period?
No, ELSS mutual funds have a lock-in period of three years, and you cannot redeem your investment before the completion of the lock-in period. After the completion of three years, you can redeem your ELSS units and withdraw your investment.
Are ELSS funds suitable for short-term investments?
ELSS funds are primarily designed for long-term investments as they have a lock-in period of three years. They are not suitable for short-term investments as their performance may be subject to market volatility over shorter time frames.
How can I choose the right ELSS mutual fund?
Choosing the right ELSS mutual fund involves considering various factors such as historical performance, fund manager’s expertise, investment philosophy, portfolio holdings, risk management practices, and your individual financial goals and risk tolerance. It’s advisable to do thorough research and seek the guidance of a financial advisor before making an investment decision.
Can I invest in multiple ELSS mutual funds?
Yes, you can invest in multiple ELSS mutual funds to diversify your risk. Spreading your investments across different ELSS funds with varying investment styles and market caps can help manage risk and increase the potential for wealth creation.
Are ELSS funds risk-free?
No, ELSS funds, like all mutual funds, are subject to market risks. The performance of ELSS funds depends on the performance of the underlying equities in the portfolio, which can be affected by market volatility and other external factors. It’s important to understand the risks associated with investing in ELSS funds and assess your risk tolerance before investing.
Can I continue to invest in ELSS funds after the completion of the lock-in period?
Yes, you can continue to invest in ELSS funds even after the completion of the lock-in period. Once the lock-in period is over, your ELSS investment becomes a regular mutual fund investment, and you can redeem or continue to hold your units based on your investment goals and time horizon.
Can I switch from one ELSS fund to another?
Yes, most ELSS funds allow investors to switch from one ELSS fund to another within the same fund house. However, switching from one ELSS fund to another may attract capital gains tax, and it’s important to understand the tax implications and other costs associated with switching before making a decision.
Are ELSS funds guaranteed to give high returns?
No, ELSS funds, like all mutual funds, do not guarantee any returns. The performance of ELSS funds depends on various factors, including market conditions, portfolio holdings, and fund manager’s decisions. Past performance may not necessarily indicate future performance, and it’s important to understand the risks and return potential associated with ELSS funds before investing.
