Investment is a monetary asset that is purchased with the idea of providing higher returns in the future to sustain income or to sell it at a higher profit. There are many investment plans that you can choose from like stocks, funds, equity shares, etc. where you can invest for a certain number of years and get higher returns if the market remains favourable. People generally keep the asset for 5-10 years to withstand the volatility of the stock market and get higher returns. You can see the top 10 ELSS funds for more details before finally zeroing down on one.
What is ELSS?
ELSS stands for Equity Linked Savings Scheme. They are investments in the mutual fund that qualifies in the Section 80C of the Income Tax Act for tax exemption. You can invest and get that money back as a tax rebate with the help of Section 80C.
Among other tax-saving investment options such as provident fund, national pension scheme or national savings certificates, ELSS provides the highest returns. Thus, it is easily the go-to option.
The compulsory lock-in period is 3 years and the minimum application amount is just Rs. 500. Investment can be of 2 types: Systematic Investment Plan and lump sum investment. The SIP method is the best one as that ensures volatility in the equity market to withstand ups and downs and combat the market risks along with providing additional benefits of compounding and rupee-cost averaging.
Best ELSS mutual funds
There are many ELSS funds that one can choose from. Here are the top 10 ELSS funds:
Aditya Birla Tax Relief ’96 Fund
This is one of the oldest ELSS schemes in the market. Some of the features are:
- Its objective is to save tax while growing money through investments.
- The NAV of the scheme is Rs. 32.88.
- It follows a mid-cap and large-cap style of investment with a portfolio of 50 stocks.
- A little high turnover ratio of 41% making the scheme high in demand among the people.
Axis Long Term Equity Fund
This is the most popular scheme among ELSS. Some of the schemes are:
- Its objective is to generate income and long-term capital appreciation from equity-related securities.
- Follows a predominantly large-cap styled investment. However, a considerable allocation is also made in the mid-cap with a portfolio of 35 stocks.
- The NAV of the scheme is Rs. 50.25.
- It has a normal turnover ratio of 54%.
DSP Tax Saver Fund
This scheme is the most consistent one and performs well under pressure. The salient features of the scheme are:
- The NAV of the scheme is Rs. 52.64.
- The objective of the scheme is to generate medium to long-term capital appreciation from equity-related securities.
- It has an investment in 66 stocks across various sectors.
- It has a turnover ratio of as high as 128%.
Franklin Tax Shield Fund
This is another scheme in the ELSS fund which is prevalent in the market. The points to note of the features are:
- The NAV of this ELSS fund is Rs. 587.87.
- The objective is to provide medium to long-term capital growth with a good rebate.
- It is predominantly invested in large-cap style investments.
- The turnover ratio is 17.55% which is considerably lower than other schemes.
Invesco India Tax Plan
It has been a strong performer in ELSS since its inception in 2006. Some of the key features are:
- It allows investment across 39 stocks picked from across 12 sectors.
- It has investment across energy, technology and financial sectors.
- The NAV of the scheme is Rs. 54.83.
- The turnover ratio is 120% which is higher than most others.
Quantum Tax Saving
This plan allows you to invest in equities and save tax also. The salient features of the plan are:
- The annualized return is 5.89% for 3 years.
- Its goal is ensuring long term capital appreciation.
- The NAV of the fund is Rs. 53.90.
- The turnover ratio is 12.67%.
Mirae Asset Tax Saver Fund
This is among the most preferred ELSS in the market. The key features are:
- Generation of long term capital appreciation.
- The NAV of the scheme is Rs. 20.77.
- This has a turnover ratio of nominal 59%.
- It gives the greatest benefit of compounding.
BOI AXA Tax Advantage Fund
One of the top-performing ELSS funds is this fund. The features are:
- Generation of long-term capital growth.
- It is like a multi-cap fund.
- A high turnover ratio of 80.33% which means your invested money will go through the volatility of the market making it risky.
- NAV of the fund is Rs. 62.30.
Tata India Tax Saving Fund
This is among the best performing ELSS funds in India. The salient features of the scheme are:
- The NAV of the fund id Rs. 20.94.
- Its goal is providing medium to long term gains on investment.
- The benefit of compounding can be achieved as well.
- The turnover ratio is 37.70%.
Canara Robeco Equity Taxsaver
This scheme is new in the ELSS market but still performs highly. Some of the noteworthy points are:
- Generation of long term capital appreciation.
- The benefit of compounding can be achieved through the SIP mode of investment only.
- The turnover ratio of 190.40% makes investment highly risky.
- NAV of Rs. 73.14.
There are several other ELSS funds that one can try out as well which are readily available. One needs to take the risk factor into mind before investing. All you need is to comply with the standard KYC form and you are all set to begin!