Equity Linked Savings Scheme (ELSS) funds invest the bulk of their capital in equities and equity-related products and have a three-year lock-in period. Following this term, an ELSS plan becomes an open-ended scheme.
Investments in ELSS funds of up to Rs.1.5 lakh are tax deductible under section 80C of the Income Tax Act of 1961. The fundamental goal of the finest ELSS mutual funds is to maximise portfolio performance over time while providing tax benefits.
ELSS Mutual Fund Characteristics
These are some characteristics of Best ELSS mutual funds in 2023:
Asset allocation: ELSS must allocate at least 80% of its investment corpus to equity shares, according to SEBI requirements.
Risk-reward ratio: Because top ELSS mutual funds invest mostly in equities, their performance is influenced by fluctuating market circumstances. As a result, the risks connected with these funds are exceedingly substantial. At the same time, their exposure to equities allows them to possibly outperform other investment alternatives such as fixed deposits or debt funds.
Taxability
Long-term capital gains: Because ELSS schemes have a three-year lock-in period, all gains are recognised as LTCG. Consequently, revenues from the sale of ELSS units over Rs. 1 lakh are subject to a 10% tax.
TDS: Dividends earned from ELSS plans that exceed Rs.5000 are subject to 10% TDS.
Tax exemption: As previously stated, investments in the top ELSS mutual funds of up to Rs.1.5 lakh are deducted from a person’s total taxable income in any fiscal year.
Who Are These Funds Designed For?
The top ELSS mutual funds 2023 are designed to save taxes while maximising portfolio gains; consequently, these funds are also known as best tax saving mutual funds. After all, these fund schemes primarily invest in equities, allowing them to provide significant returns when compared to other investment routes such as debt-oriented schemes or FDs. Yet, due of substantial investments in equity shares, it is riskier than those investing choices. But, before picking on the finest ELSS mutual fund for them, investors must examine several factors.
Financial goal
When it comes to investing, there are no preset answers. While one strategy may be good for an investor, another may not be the best alternative. As a result, before purchasing ELSS units, consumers must determine their investing goals.
Investing time horizon: ELSS funds have a three-year lock-in period, which means investors cannot redeem their units during that time. As a result, it is critical for investors to consider this element before parting with their money.
Risk appetite
Tax saver funds are exposed to volatile market conditions owing to their underlying securities. Hence, these schemes are associated with high risk. Investors must make sure to assess their risk profile before they decide to invest in this type of mutual fund scheme.
Expense ratio
This refers to the yearly maintenance charge imposed by a fund house on investors to manage a scheme. One should compare the expense ratio of different tax saver funds before investing in one.
Fund’s past performance
Investors should look at a fund’s performance over the previous three and five years, as well as longer if required. It assists investors in understanding how a particular scheme has performed in response to changing market conditions. This allows them to judge if a strategy is capable of achieving its planned goal. Nonetheless, any scheme’s previous performance might not accurately represent how it can deliver in the future.
Direct vs Regular
AMCs provide two kinds of plans: direct and regular. Because they are offered directly, the former does not require the involvement of a broker or distributor. Yet, other parties are involved in the latter instance. Before deciding on one or the other, individuals must consider the required expenditures.
Major Advantages
The following are some of the advantages of investing in the finest ELSS mutual fund in 2023:
Shortest lock-in period
ELSS mutual funds have the lowest lock-in period of any tax-saving investing option, at three years. For instance PPF has a maturity period of at least 15 years. As a result, tax-advantaged fund schemes are more liquid.
Possibility of generating high returns
Other tax-saving investment choices, such as bank fixed deposits and PPF, produce a fixed income, as opposed to ELSS mutual funds. ELSS funds, on the other hand, invest in equities of various firms, and their NAV changes correspondingly. An increase in the value of such underlying assets might result in significant profits for investors.
Tax advantages
According to the requirements of the Income Tax Act, investments up to Rs.1.5 lakh are eligible for tax deductions.
Modes of investment
Individuals may invest in the top ELSS mutual funds through two methods: Systematic Investment Plan and lump-sum. Anyone can invest in a programme through SIP by paying predetermined instalments at regular periods (monthly, quarterly, annually, etc.). The lump-sum option, on the other hand, allows investors to contribute all available funds to an ELSS mutual fund plan at once.
Let us now take a look at the top 15 mutual fund schemes.
Quant Tax Plan Direct Growth
Fund Performance
The Quant Tax Plan Fund has delivered annualised returns of 40.2% over the previous three years and 22.54% over the last five years. The Quant Tax Plan Fund is a Quant Mutual Fund in the Equity sector.
Minimum Investment Amount
The minimum amount necessary to invest in Quant Tax Plan Fund by lump sum is $500, while the minimum amount required to invest via SIP is $500.
| Minimum Investment Amount | ? 500 |
| AUM | ? 2,506 cr |
| 1Y Returns | 14.3% |
Parag Parikh Tax Saver Fund Direct Growth
Fund Performance
The Parag Parikh Tax Saving Fund is a PPFAS Mutual Fund in the Equity sector.
Minimum Investment Amount
The minimum amount necessary to invest in Parag Parikh Tax Saver Fund by lump sum is ?500, while the minimum amount required to invest via SIP is ?1,000.
| Minimum Investment Amount | ? 500 |
| AUM | ? 942 cr |
| 1Y Returns | 15.3% |
Mirae Asset Tax Saver Fund Direct Growth
Fund Performance
The Mirae Asset Tax Saver Fund has produced annualised returns of 22.19% over the previous three years and 15.69% over the last five years. Mirae Asset Tax Saving Fund is a Mirae Asset Mutual Fund in the Equity sector.
Minimum Investment Amount
The minimum amount necessary to invest in Mirae Asset Tax Saver Fund by lump payment is 500, while the minimum amount required to invest via SIP is 500.
| Minimum Investment Amount | ? 500 |
| AUM | ? 14,020 cr |
| 1Y Returns | 8.8% |
Canara Robeco Equity Tax Saver Direct Growth
Fund Performance
The Canara Robeco Equity Tax Saver Fund has produced annualised returns of 20.28% over the previous three years and 15.96% over the last five years. Canara Robeco Equity Tax Saving Fund is a Canara Robeco Mutual Fund in the Equity sector.
Minimum Investment Amount
The minimum amount necessary to invest in Canara Robeco Equity Tax Saver Fund by lump payment is 500, while the minimum amount required to invest via SIP is 500.
| Minimum Investment Amount | ? 500 |
| AUM | ? 4,563 cr |
| 1Y Returns | 9.1% |
IDFC Tax Advantage (ELSS) Direct Plan Growth
Fund Performance
The IDFC Tax Advantage (ELSS) Fund has delivered annualised returns of 26.24% over the previous three years and 13.24% over the last five years. The IDFC Tax Advantage (ELSS) Fund is part of the IDFC Mutual Funds Equity category.
Minimum Investment Amount
The minimum amount necessary to invest in IDFC Tax Advantage (ELSS) Fund by lump sum is 500, while the minimum amount required to invest via SIP is 500.
| Minimum Investment Amount | ? 500 |
| AUM | ? 4,026 cr |
| 1Y Returns | 12.1% |
PGIM India ELSS Tax Saver Fund Direct Growth
Performance of the Fund
The PGIM India ELSS Tax Saver Fund generated annualised returns of 24.92% over the previous three years and 14% over the previous five years. The Equity division of PGIM India Mutual Funds houses the ELSS Tax Saver Fund.
The minimum investment
Amount for the PGIM India ELSS Tax Saver Fund is 500 in both lump sum and SIP transactions.
| Minimum Investment Amount | ? 500 |
| AUM | ? 448 cr |
| 1Y Returns | 8.2% |
Bank of India Tax Advantage Direct Growth
Performance of the Fund
The Bank of India Tax Advantage Fund generated annualised returns of 23.08% over the last three years and 13.89% over the previous five years. The Equity subcategory of BOI AXA Mutual Funds includes the Bank of India Tax Advantage Fund.
500 rupees minimum investment is needed to invest in the Bank of India Tax Advantage Fund by lump sum, and 500 rupees minimum investment is needed to invest via SIP.
| Minimum Investment Amount | ? 500 |
| AUM | ? 679 cr |
| 1Y Returns | 7.2% |
Kotak Tax Saver Fund Direct Growth
Performance of the Fund
Over the last three years, the Kotak Tax Saver Fund has generated annualised returns of 22.07% and 14.8%, respectively. The equity subcategory of Kotak Mahindra Mutual Funds includes the Kotak Tax Saver Fund.
Kotak Tax Saver Fund requires a minimum investment of 500 in both lump sum and systematic investment plans (SIPs).
| Minimum Investment Amount | ? 500 |
| AUM | ? 3161 cr |
| 1Y Returns | 11.2% |
Union Long Term Equity Fund Direct Growth
Performance of the Fund
The Union Long Term Equity Fund generated returns of 22% annually over the last three years and 13.16% annually over the last five years. The Union Long Term Equity Fund is a part of the Union Mutual Funds’ Equity subcategory.
Union Long Term Equity Fund requires a minimum investment of 500 in both lump sum and systematic investment plans (SIPs).
| Minimum Investment Amount | ? 500 |
| AUM | ? 578 cr |
| 1Y Returns | 7.5% |
DSP Tax Saver Direct Plan Growth
Performance of the Fund
The DSP Tax Saver Fund generated annualised returns of 21.93% over the last three years and 13.79% over the previous five. The DSP Tax Saver Fund is a member of the DSP Mutual Funds’ Equity group.
The minimum investment amount for the DSP Tax Saver Fund is $5000 for lump sum investments and $5000 for SIP investments.
| Minimum Investment Amount | ? 500 |
| AUM | ? 10445 cr |
| 1Y Returns | 7.7% |
ICICI Prudential Long Term Equity Fund (Tax Saving) Direct Plan Growth
Performance of the Fund
Over the last three and five years, the ICICI Prudential Long Term Equity Fund has generated average returns of 20.35% and 11.75%, respectively. The Equity subcategory of ICICI Prudential Mutual Funds includes the ICICI Prudential Long Term Equity Fund.
The ICICI Prudential Long Term Equity Fund requires a minimum investment of $5000 via lump payment and $5000 via systematic investment plan (SIP).
| Minimum Investment Amount | ? 500 |
| AUM | ? 9992 cr |
| 1Y Returns | 3.7% |
SBI Long Term Equity Fund Direct Plan Growth
Performance of the fund: The SBI Long Term Equity Fund generated average returns of 23.32% over the last three years and 11.88% over the last five. The Equity subcategory of SBI Mutual Funds includes the SBI Long Term Equity Fund.
SBI Long Term Equity Fund requires a minimum investment of 500 in both lump payment and systematic investment plans (SIPs).
| Minimum Investment Amount | ? 500 |
| AUM | ? 11924 cr |
| 1Y Returns | 13.2% |
Mahindra Manulife ELSS Kar Bachat Yojana Direct Growth
Performance of the Fund
Over the past three and five years, the Mahindra Manulife ELSS Kar Bachat Yojana Fund has generated yearly returns of 22.92% and 12.42%, respectively. The Mahindra Manulife ELSS Kar Bachat Scheme Fund is a part of Mahindra Mutual Funds’ Equity subcategory.
Minimal Amount to Invest: The Mahindra Manulife ELSS Kar Bachat Yojana Fund has a 500 rupee minimal investment requirement for both lump sum and systematic investment plans.
| Minimum Investment Amount | ? 500 |
| AUM | ? 524 cr |
| 1Y Returns | 8% |
Sundaram Tax Savings Fund Direct
Performance of the Fund
Over the last three years, the Sundaram Tax Savings Fund has generated annualised yields of 21.64% and 10.28%, respectively. The equity subcategory of Sundaram Mutual Funds includes the Sundaram Tax Savings Fund.
Sundaram Tax Savings Fund requires a minimal investment of 500 in both lump sum and systematic investment plans (SIP).
| Minimum Investment Amount | ? 500 |
| AUM | ? 965 cr |
| 1Y Returns | 6.4% |
Franklin India Taxshield Direct Growth
Performance of the Fund
Over the last three years, the Franklin India Taxshield Fund has generated annualised yields of 21.42% and 11.54%, respectively. The Franklin India Taxshield Fund is a part of Franklin Templeton Mutual Funds’ Equity subcategory.
Franklin India Taxshield Fund requires a minimal investment of 500 in both lump sum and systematic investment plans (SIPs).
| Minimum Investment Amount | ? 500 |
| AUM | ? 4908 cr |
| 1Y Returns | 8.5% |
1 thought on “Best ELSS Mutual Funds”