Top 10 Tax Saving Mutual Funds: A Comprehensive Guide
When it comes to investing in mutual funds, investors often seek tax-saving options. Tax-saving mutual funds, also known as Equity Linked Saving Schemes (ELSS), are a great way to save taxes and also potentially earn high returns on investments. In this blog, we will discuss the top 10 tax-saving mutual funds in India, their features, and performance.
- Axis Long Term Equity Fund
Axis Long Term Equity Fund is one of the best-performing tax-saving mutual funds with a long-term horizon. It has consistently outperformed its benchmark and peers, providing investors with a high return on investment. The fund has a diversified portfolio of large-cap, mid-cap, and small-cap stocks, making it an ideal investment for investors looking for a diversified portfolio.
- Mirae Asset Tax Saver Fund
Mirae Asset Tax Saver Fund is another top-performing mutual fund in the ELSS category. The fund invests in companies with high growth potential and has a diversified portfolio across sectors. The fund has consistently outperformed its benchmark and peers, making it a great investment option for investors seeking long-term capital appreciation.
- Aditya Birla Sun Life Tax Relief 96 Fund
Aditya Birla Sun Life Tax Relief 96 Fund is a well-known name in the ELSS category. The fund has a diversified portfolio of large-cap, mid-cap, and small-cap stocks, providing investors with a well-rounded investment option. The fund has a long-term horizon and has consistently delivered high returns over the years.
- SBI Magnum Tax Gain Fund
SBI Magnum Tax Gain Fund is one of the oldest tax-saving mutual funds in India. The fund has a diversified portfolio of large-cap, mid-cap, and small-cap stocks and has consistently outperformed its benchmark and peers. The fund has a long-term horizon and is a great investment option for investors looking for capital appreciation.
- DSP Tax Saver Fund
DSP Tax Saver Fund is a popular tax-saving mutual fund that invests in a diversified portfolio of large-cap, mid-cap, and small-cap stocks. The fund has a long-term horizon and has consistently outperformed its benchmark and peers, making it a great investment option for investors seeking long-term capital appreciation.
- ICICI Prudential Long Term Equity Fund
ICICI Prudential Long Term Equity Fund is a well-diversified tax-saving mutual fund that invests in large-cap, mid-cap, and small-cap stocks. The fund has consistently outperformed its benchmark and peers, making it a great investment option for investors seeking long-term capital appreciation.
- Kotak Tax Saver Fund
Kotak Tax Saver Fund is a well-diversified mutual fund that invests in large-cap, mid-cap, and small-cap stocks. The fund has a long-term horizon and has consistently outperformed its benchmark and peers, making it a great investment option for investors seeking long-term capital appreciation.
- HDFC Tax Saver Fund
HDFC Tax Saver Fund is a well-diversified mutual fund that invests in large-cap, mid-cap, and small-cap stocks. The fund has a long-term horizon and has consistently outperformed its benchmark and peers, making it a great investment option for investors seeking long-term capital appreciation.
- Franklin India Taxshield Fund
Franklin India Taxshield Fund is a popular tax-saving mutual fund that invests in a diversified portfolio of large-cap, mid-cap, and small-cap stocks. The fund has a long-term horizon and has consistently outperformed its benchmark and peers, making it a great investment option for investors seeking long-term capital appreciation.
- Canara Robeco Equity Tax Saver Fund
Tax-saving mutual funds are a popular investment option for many investors because they not only help investors save taxes but also potentially provide high returns on investments. These mutual funds come with a lock-in period of three years, which means investors cannot withdraw their investments before the completion of three years.
It is important to note that tax-saving mutual funds, like all mutual funds, carry risks. Investors should consider their risk tolerance before investing in any mutual fund. They should also consider their investment goals, investment horizon, and past performance of the mutual fund before making an investment decision.
When investing in a tax-saving mutual fund, investors should consider the following factors:
- Fund manager’s track record: The fund manager’s past performance can provide insights into how the fund might perform in the future. Investors should look for a fund manager with a strong track record of delivering consistent returns.
- Asset allocation: The fund’s asset allocation is an important factor to consider. A diversified portfolio that includes large-cap, mid-cap, and small-cap stocks can help reduce risk and provide higher returns.
- Expense ratio: The expense ratio of a mutual fund is the fee charged by the fund house for managing the fund. Investors should look for a mutual fund with a low expense ratio as it can help increase returns.
- Risk level: The risk level of a mutual fund is an important factor to consider. Investors should consider their risk tolerance before investing in any mutual fund.
Conclusion
In conclusion, tax-saving mutual funds are a great investment option for investors looking to save taxes and potentially earn high returns on their investments. Investors should consider their investment goals, investment horizon, risk tolerance, and the past performance of the mutual fund before making an investment decision.
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Frequently Asked Questions (FAQs)
What is a tax-saving mutual fund?
A tax-saving mutual fund is a mutual fund that allows investors to save taxes under Section 80C of the Income Tax Act. These funds come with a lock-in period of three years.
How do tax-saving mutual funds save taxes?
Investments in tax-saving mutual funds are eligible for a deduction of up to Rs. 1.5 lakh under Section 80C of the Income Tax Act. This means investors can reduce their taxable income by investing in these funds.
What is the lock-in period of tax-saving mutual funds?
The lock-in period of tax-saving mutual funds is three years. Investors cannot withdraw their investments before the completion of three years.
Are tax-saving mutual funds risk-free?
No, tax-saving mutual funds carry risks like all mutual funds. Investors should consider their risk tolerance before investing in any mutual fund.
Can I invest more than Rs. 1.5 lakh in tax-saving mutual funds?
Yes, you can invest more than Rs. 1.5 lakh in tax-saving mutual funds, but only up to Rs. 1.5 lakh will be eligible for a tax deduction under Section 80C.
Can I withdraw my investment before the completion of the lock-in period?
No, investors cannot withdraw their investments before the completion of the lock-in period of three years.
Can I switch between different tax-saving mutual funds?
Yes, investors can switch between different tax-saving mutual funds, but only after the completion of the lock-in period of three years.
How is the performance of tax-saving mutual funds measured?
The performance of tax-saving mutual funds is measured against their benchmark index and category peers.
Are dividends received from tax-saving mutual funds taxable?
Yes, dividends received from tax-saving mutual funds are taxable.
Can I invest in tax-saving mutual funds through SIP?
Yes, investors can invest in tax-saving mutual funds through SIP (Systematic Investment Plan).
