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Why ELSS Over Other Tax Saving Investments

Updated on June 22, 2022 , 987 views

ELSS funds also known as Equity Linked Savings Scheme is an equity-diversified tax saving Mutual Fund that majorly invests its assets in equities or equity-linked instruments like stock markets. The ELSS Mutual Funds offer Market-linked returns, which are volatile and are dependent on the market conditions. However, financial advisors suggest Investing in ELSS funds for a long duration, as these ELSS Mutual funds generate best returns when invested for a longer duration. In the recent reports, it was seen that ELSS funds generated around 20%-30% returns when invested for 3 years, which is much more than the returns generated by other Mutual Funds.

ELSS

Comparison Of ELSS & Other Tax Saving Investment Options

The comparison of ELSS and other tax saving is based on parameters like tenure, returns, eligibility for Deduction under 80c, etc.

Let's have a look:

Parameter PPF NSC FD ELSS
Tenure 15 years 6 years 5 Years 3 years
Returns 7.60 % (Compounded Annually) 7.60 % (Compounded Annually) 7.00 - 8.00 % (Compounded Annually) No Assured Divividend / Return as it market linked
Min. Investment Rs. 500 Rs. 100 Rs. 1000 Rs. 500
Max. Investment Rs. 1.5 Lakhs No Upper Limit No Upper Limit No Upper Limit
Amount Eligible for Deduction under 80c Rs. 1.5 Lakhs Rs. 1.5 Lakhs Rs. 1.5 Lakhs Rs. 1.5 Lakhs
Taxation for Interest/return Tax-Free Interest Taxable Interest Taxable Gains up to Rs 1 lakh are free of tax. Tax at 10% applies to gains above Rs 1 lakh
Safety/Ratings Safe Safe Safe Risk

Top 5 ELSS Funds To Invest In 2022

Below is the list of Fund having Net Assets/AUM between 100 - 200 Crores.

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)5 YR (%)2021 (%)
HDFC Long Term Advantage Fund Growth ₹595.168
↑ 0.28
₹1,3181.215.435.520.617.4
BOI AXA Tax Advantage Fund Growth ₹85.38
↑ 1.07
₹570-11.3-14.7-3.21913.341.5
Baroda Pioneer ELSS 96 Growth ₹68.6676
↑ 0.33
₹210-6.1-3.517.616.711.6
PGIM India Tax Savings Fund Growth ₹21.39
↑ 0.18
₹379-9.4-7.62.713.810.537.5
Mahindra Mutual Fund Kar Bachat Yojana Growth ₹16.6431
↑ 0.16
₹452-9.4-9.4-0.113.37.939.4
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 14 Jan 22

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1. HDFC Long Term Advantage Fund

To generate long term capital appreciation from a portfolio that is predominantly in equity and equity related instruments

HDFC Long Term Advantage Fund is a Equity - ELSS fund was launched on 2 Jan 01. It is a fund with Moderately High risk and has given a CAGR/Annualized return of 21.4% since its launch.  Ranked 23 in ELSS category. .

Below is the key information for HDFC Long Term Advantage Fund

HDFC Long Term Advantage Fund
Growth
Launch Date 2 Jan 01
NAV (14 Jan 22) ₹595.168 ↑ 0.28   (0.05 %)
Net Assets (Cr) ₹1,318 on 30 Nov 21
Category Equity - ELSS
AMC HDFC Asset Management Company Limited
Rating
Risk Moderately High
Expense Ratio 2.25
Sharpe Ratio 2.27
Information Ratio -0.15
Alpha Ratio 1.75
Min Investment 500
Min SIP Investment 500
Exit Load NIL

Growth of 10,000 investment over the years.

DateValue
31 May 17₹10,000
31 May 18₹10,915
31 May 19₹12,033
31 May 20₹9,230
31 May 21₹16,172

HDFC Long Term Advantage Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹300,000
expected amount after 5 Years is ₹470,047.
Net Profit of ₹170,047
Invest Now

Purchase not allowed

Returns for HDFC Long Term Advantage Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 14 Jan 22

DurationReturns
1 Month 4.4%
3 Month 1.2%
6 Month 15.4%
1 Year 35.5%
3 Year 20.6%
5 Year 17.4%
10 Year
15 Year
Since launch 21.4%
Historical performance (Yearly) on absolute basis
YearReturns
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
Fund Manager information for HDFC Long Term Advantage Fund
NameSinceTenure

Data below for HDFC Long Term Advantage Fund as on 30 Nov 21

Equity Sector Allocation
SectorValue
Asset Allocation
Asset ClassValue
Top Securities Holdings / Portfolio
NameHoldingValueQuantity

2. BOI AXA Tax Advantage Fund

The Scheme seeks to generate long-term capital growth from a diversified portfolio of predominantly equity and equity-related securities across all market capitalisations. The Scheme is in the nature of diversified multi-cap fund. The Scheme is not providing any assured or guaranteed returns.(There can be no assurance that the investment objectives of the Scheme will be realized.)

BOI AXA Tax Advantage Fund is a Equity - ELSS fund was launched on 25 Feb 09. It is a fund with Moderately High risk and has given a CAGR/Annualized return of 17.5% since its launch.  Ranked 13 in ELSS category.  Return for 2021 was 41.5% , 2020 was 31.2% and 2019 was 14.6% .

Below is the key information for BOI AXA Tax Advantage Fund

BOI AXA Tax Advantage Fund
Growth
Launch Date 25 Feb 09
NAV (24 Jun 22) ₹85.38 ↑ 1.07   (1.27 %)
Net Assets (Cr) ₹570 on 31 May 22
Category Equity - ELSS
AMC BOI AXA Investment Mngrs Private Ltd
Rating
Risk Moderately High
Expense Ratio 2.56
Sharpe Ratio 0.17
Information Ratio 0.69
Alpha Ratio -2.7
Min Investment 500
Min SIP Investment 500
Exit Load NIL

Growth of 10,000 investment over the years.

DateValue
31 May 17₹10,000
31 May 18₹12,638
31 May 19₹11,637
31 May 20₹10,929
31 May 21₹19,127
31 May 22₹20,132

BOI AXA Tax Advantage Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹300,000
expected amount after 5 Years is ₹426,080.
Net Profit of ₹126,080
Invest Now

Returns for BOI AXA Tax Advantage Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 14 Jan 22

DurationReturns
1 Month -2.3%
3 Month -11.3%
6 Month -14.7%
1 Year -3.2%
3 Year 19%
5 Year 13.3%
10 Year
15 Year
Since launch 17.5%
Historical performance (Yearly) on absolute basis
YearReturns
2021 41.5%
2020 31.2%
2019 14.6%
2018 -16.3%
2017 57.7%
2016 -1.2%
2015 2.1%
2014 44%
2013 9.1%
2012 24.8%
Fund Manager information for BOI AXA Tax Advantage Fund
NameSinceTenure
Aakash Manghani15 Jul 192.88 Yr.
Alok Singh27 Apr 220.1 Yr.

Data below for BOI AXA Tax Advantage Fund as on 31 May 22

Equity Sector Allocation
SectorValue
Financial Services30.11%
Consumer Cyclical15.62%
Basic Materials12.89%
Technology10.95%
Health Care7.07%
Industrials6.11%
Consumer Defensive5.55%
Energy4.12%
Communication Services2.91%
Utility1.54%
Real Estate1.03%
Asset Allocation
Asset ClassValue
Cash2%
Equity97.91%
Debt0.09%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
ICICI Bank Ltd (Financial Services)
Equity, Since 31 Oct 18 | ICICIBANK
6%₹39 Cr519,840
↑ 46,659
HDFC Bank Ltd (Financial Services)
Equity, Since 31 Dec 10 | HDFCBANK
5%₹28 Cr202,169
↓ -8,457
Reliance Industries Ltd (Energy)
Equity, Since 30 Nov 18 | RELIANCE
4%₹25 Cr87,880
↑ 13,500
Infosys Ltd (Technology)
Equity, Since 30 Jun 20 | INFY
4%₹24 Cr155,489
↓ -4,381
Bajaj Finance Ltd (Financial Services)
Equity, Since 31 May 18 | BAJFINANCE
3%₹19 Cr28,188
↓ -4,398
State Bank of India (Financial Services)
Equity, Since 31 Oct 21 | SBIN
3%₹16 Cr330,426
↑ 56,427
Cholamandalam Investment and Finance Co Ltd (Financial Services)
Equity, Since 31 Jan 18 | CHOLAFIN
3%₹16 Cr212,404
Kotak Mahindra Bank Ltd (Financial Services)
Equity, Since 30 Sep 18 | KOTAKBANK
2%₹13 Cr75,364
↓ -4,000
Varun Beverages Ltd (Consumer Defensive)
Equity, Since 28 Feb 22 | VBL
2%₹11 Cr104,928
↑ 26,533
Axis Bank Ltd (Financial Services)
Equity, Since 31 Jan 22 | AXISBANK
2%₹11 Cr154,028
↑ 9,000

3. Baroda Pioneer ELSS 96

The main objective of the scheme is to provide the investor long term capital growth as also tax benefit under section 80C of the Income Tax Act, 1961.

Baroda Pioneer ELSS 96 is a Equity - ELSS fund was launched on 2 Mar 15. It is a fund with Moderately High risk and has given a CAGR/Annualized return of 8.4% since its launch. .

Below is the key information for Baroda Pioneer ELSS 96

Baroda Pioneer ELSS 96
Growth
Launch Date 2 Mar 15
NAV (11 Mar 22) ₹68.6676 ↑ 0.33   (0.48 %)
Net Assets (Cr) ₹210 on 31 Jan 22
Category Equity - ELSS
AMC Baroda Pioneer Asset Management Co. Ltd.
Rating Not Rated
Risk Moderately High
Expense Ratio 2.55
Sharpe Ratio 2.51
Information Ratio -0.09
Alpha Ratio 5.69
Min Investment 500
Min SIP Investment 500
Exit Load NIL

Growth of 10,000 investment over the years.

DateValue
31 May 17₹10,000
31 May 18₹10,783
31 May 19₹10,389
31 May 20₹8,386
31 May 21₹13,921

Baroda Pioneer ELSS 96 SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹300,000
expected amount after 5 Years is ₹405,518.
Net Profit of ₹105,518
Invest Now

Returns for Baroda Pioneer ELSS 96

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 14 Jan 22

DurationReturns
1 Month -3.9%
3 Month -6.1%
6 Month -3.5%
1 Year 17.6%
3 Year 16.7%
5 Year 11.6%
10 Year
15 Year
Since launch 8.4%
Historical performance (Yearly) on absolute basis
YearReturns
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
Fund Manager information for Baroda Pioneer ELSS 96
NameSinceTenure

Data below for Baroda Pioneer ELSS 96 as on 31 Jan 22

Equity Sector Allocation
SectorValue
Asset Allocation
Asset ClassValue
Top Securities Holdings / Portfolio
NameHoldingValueQuantity

4. PGIM India Tax Savings Fund

"The primary objective of the Scheme is to generate long-term capital appreciation by predominantly investing in equity & equity related instruments and to enable eligible investors to avail deduction from total income, as permitted under the Income Tax Act, 1961 as amended from time to time. However, there is no assurance that the investment objective shall be realize"

PGIM India Tax Savings Fund is a Equity - ELSS fund was launched on 11 Dec 15. It is a fund with Moderately High risk and has given a CAGR/Annualized return of 12.3% since its launch.  Return for 2021 was 37.5% , 2020 was 17.9% and 2019 was 8.2% .

Below is the key information for PGIM India Tax Savings Fund

PGIM India Tax Savings Fund
Growth
Launch Date 11 Dec 15
NAV (24 Jun 22) ₹21.39 ↑ 0.18   (0.85 %)
Net Assets (Cr) ₹379 on 31 May 22
Category Equity - ELSS
AMC Pramerica Asset Managers Private Limited
Rating Not Rated
Risk Moderately High
Expense Ratio 2.46
Sharpe Ratio 0.56
Information Ratio 0.22
Alpha Ratio 2.12
Min Investment 500
Min SIP Investment 500
Exit Load NIL

Growth of 10,000 investment over the years.

DateValue
31 May 17₹10,000
31 May 18₹10,922
31 May 19₹11,442
31 May 20₹9,333
31 May 21₹15,884
31 May 22₹17,457

PGIM India Tax Savings Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹300,000
expected amount after 5 Years is ₹395,578.
Net Profit of ₹95,578
Invest Now

Returns for PGIM India Tax Savings Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 14 Jan 22

DurationReturns
1 Month -2.5%
3 Month -9.4%
6 Month -7.6%
1 Year 2.7%
3 Year 13.8%
5 Year 10.5%
10 Year
15 Year
Since launch 12.3%
Historical performance (Yearly) on absolute basis
YearReturns
2021 37.5%
2020 17.9%
2019 8.2%
2018 -6.4%
2017 39.3%
2016 1.7%
2015
2014
2013
2012
Fund Manager information for PGIM India Tax Savings Fund
NameSinceTenure
Srinivas Ravuri14 Sep 192.71 Yr.
Puneet Pal1 Dec 210.5 Yr.
Utkarsh Katkoria1 Jun 211 Yr.

Data below for PGIM India Tax Savings Fund as on 31 May 22

Equity Sector Allocation
SectorValue
Financial Services28.02%
Technology12.29%
Industrials11.35%
Health Care10.4%
Utility7.17%
Consumer Cyclical6.49%
Basic Materials6.49%
Energy6.17%
Communication Services5.64%
Consumer Defensive3.01%
Asset Allocation
Asset ClassValue
Cash2.97%
Equity97.03%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
ICICI Bank Ltd (Financial Services)
Equity, Since 31 Jan 16 | ICICIBANK
7%₹28 Cr370,500
Infosys Ltd (Technology)
Equity, Since 31 Dec 15 | INFY
7%₹25 Cr161,129
↑ 14,000
Bharti Airtel Ltd (Communication Services)
Equity, Since 28 Feb 19 | BHARTIARTL
5%₹18 Cr240,805
Reliance Industries Ltd (Energy)
Equity, Since 31 Aug 17 | RELIANCE
4%₹16 Cr58,250
Larsen & Toubro Ltd (Industrials)
Equity, Since 30 Sep 17 | LT
4%₹16 Cr95,664
Axis Bank Ltd (Financial Services)
Equity, Since 30 Nov 21 | AXISBANK
4%₹16 Cr218,000
↑ 23,000
HDFC Bank Ltd (Financial Services)
Equity, Since 31 Dec 15 | HDFCBANK
4%₹16 Cr114,200
↑ 14,000
State Bank of India (Financial Services)
Equity, Since 31 Oct 18 | SBIN
4%₹15 Cr294,174
GAIL (India) Ltd (Utilities)
Equity, Since 31 Jan 22 | GAIL
3%₹13 Cr790,000
ITC Ltd (Consumer Defensive)
Equity, Since 31 Aug 17 | ITC
3%₹12 Cr450,000

5. Mahindra Mutual Fund Kar Bachat Yojana

The investment objective of the Scheme is to generate long-term capital appreciation through a diversified portfolio of equity and equity related securities. The Scheme does not guarantee or assure any returns.

Mahindra Mutual Fund Kar Bachat Yojana is a Equity - ELSS fund was launched on 18 Oct 16. It is a fund with Moderately High risk and has given a CAGR/Annualized return of 9.4% since its launch.  Return for 2021 was 39.4% , 2020 was 14.1% and 2019 was 4.5% .

Below is the key information for Mahindra Mutual Fund Kar Bachat Yojana

Mahindra Mutual Fund Kar Bachat Yojana
Growth
Launch Date 18 Oct 16
NAV (24 Jun 22) ₹16.6431 ↑ 0.16   (0.97 %)
Net Assets (Cr) ₹452 on 31 May 22
Category Equity - ELSS
AMC Mahindra Asset Management Company Pvt. Ltd.
Rating Not Rated
Risk Moderately High
Expense Ratio 2.41
Sharpe Ratio 0.5
Information Ratio 0.01
Alpha Ratio 1.26
Min Investment 500
Min SIP Investment 500
Exit Load NIL

Growth of 10,000 investment over the years.

DateValue
31 May 17₹10,000
31 May 18₹10,146
31 May 19₹10,335
31 May 20₹8,379
31 May 21₹14,103
31 May 22₹15,432

Mahindra Mutual Fund Kar Bachat Yojana SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹300,000
expected amount after 5 Years is ₹367,070.
Net Profit of ₹67,070
Invest Now

Returns for Mahindra Mutual Fund Kar Bachat Yojana

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 14 Jan 22

DurationReturns
1 Month -1.7%
3 Month -9.4%
6 Month -9.4%
1 Year -0.1%
3 Year 13.3%
5 Year 7.9%
10 Year
15 Year
Since launch 9.4%
Historical performance (Yearly) on absolute basis
YearReturns
2021 39.4%
2020 14.1%
2019 4.5%
2018 -9.8%
2017 24.8%
2016
2015
2014
2013
2012
Fund Manager information for Mahindra Mutual Fund Kar Bachat Yojana
NameSinceTenure
Manish Lodha21 Dec 201.44 Yr.
Fatema Pacha16 Oct 201.62 Yr.

Data below for Mahindra Mutual Fund Kar Bachat Yojana as on 31 May 22

Equity Sector Allocation
SectorValue
Financial Services29.71%
Industrials14.58%
Technology13.14%
Consumer Cyclical10.83%
Basic Materials9.19%
Energy5.98%
Health Care4.8%
Consumer Defensive4.23%
Communication Services1.9%
Utility1.58%
Real Estate1.17%
Asset Allocation
Asset ClassValue
Cash2.88%
Equity97.12%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
HDFC Bank Ltd (Financial Services)
Equity, Since 31 Dec 16 | HDFCBANK
9%₹43 Cr313,876
↑ 103,000
ICICI Bank Ltd (Financial Services)
Equity, Since 31 May 19 | ICICIBANK
7%₹33 Cr443,120
↓ -60,000
Infosys Ltd (Technology)
Equity, Since 29 Feb 20 | INFY
7%₹31 Cr198,307
Reliance Industries Ltd (Energy)
Equity, Since 31 Mar 18 | RELIANCE
6%₹28 Cr99,014
Axis Bank Ltd (Financial Services)
Equity, Since 31 Jan 21 | AXISBANK
3%₹14 Cr188,500
Hindustan Unilever Ltd (Consumer Defensive)
Equity, Since 30 Apr 20 | HINDUNILVR
3%₹13 Cr58,900
↓ -3,000
Bajaj Finance Ltd (Financial Services)
Equity, Since 30 Nov 21 | BAJFINANCE
3%₹13 Cr19,000
Kotak Mahindra Bank Ltd (Financial Services)
Equity, Since 31 Mar 18 | KOTAKBANK
2%₹11 Cr63,689
Larsen & Toubro Ltd (Industrials)
Equity, Since 31 Aug 18 | LT
2%₹11 Cr65,042
Wipro Ltd (Technology)
Equity, Since 30 Nov 21 | WIPRO
2%₹11 Cr211,200
↑ 40,000

How ELSS Better Than Other Tax Saving Investments?

There are various Tax Saving Investment options in India among which ELSS is one of the best options. How? Here are some of the reasons mentioned.

High Returns over Long-Term

The ELSS funds allocate the highest number of assets in stock market among other tax saving investments. So, these funds earn best Inflation-beating returns amongst all. If invested for a longer duration, the rate of returns of ELSS can easily beat the returns of other traditional debt-oriented investments. Therefore, ELSS Mutual funds provide investors with the best of both worlds- high returns and tax benefits.

Shortest Lock-in Period

The ELSS Mutual Funds have a short lock-in period as compared to the traditional tax saving investment options. The lock-in period of ELSS funds is 3 years while that of PPF is 15 years and of NPS is until retirement. So, by investing in ELSS your money does not get locked for a longer duration and you can stop investing soon after the lock-in is over.

Highly Flexible Investment

The flexibility of ELSS Mutual Funds is much more than all other tax saving investments. Unlike traditional investments, there is no need of investing in only one type of option. ELSS funds enable you to diversify your portfolio with different kinds of investments. Also, the investors can remain invested in these funds even after the lock-in period is over. So, once the lock-in is over, you can easily choose to remain invested or redeem as per your convenience.

Conclusion

In conclusion, here are a few tips for investors investing in ELSS Funds.

  • Start investing in ELSS early
  • Invest within your limits
  • Do not choose dividend reinvestment
  • Redeem slowly and gradually
  • Invest via a SIP
Disclaimer:
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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