10 Best ELSS Mutual Funds

Meaning of ELSS Mutual Funds

ELSS, or Equity Linked Savings Scheme, is a type of mutual fund in India that is designed to provide tax benefits to investors. ELSS funds invest in a diverse portfolio of equity stocks and aim to deliver long-term capital appreciation for investors.

Overall, ELSS funds are a tax-saving investment option that offers investors the opportunity to achieve long-term capital appreciation while also benefiting from tax deductions. ELSS funds are suitable for investors who are willing to accept a higher level of risk and have a long-term investment horizon. However, investors should be aware of the fund’s lock-in period, volatility, and expense ratio before investing.

10 Best ELSS Mutual Funds

There are several good ELSS (Equity Linked Savings Scheme) mutual funds available in the market that offer tax benefits and the potential for long-term capital appreciation. Some of the best ELSS Mutual funds to consider include:

1. HDFC Tax Saver Fund
2. ICICI Prudential Long-Term Equity Fund
3. SBI Magnum Tax Gain Scheme
4. Reliance Tax Saver Fund
5. Aditya Birla Sun Life Tax Relief 96
6. DSP BlackRock Tax Saver Fund
7. Axis Long-Term Equity Fund
8. UTI Equity Tax Savings Fund
9. Kotak Tax Saver Fund
10. Birla Sun Life Tax Relief 96 Fund

HDFC Tax Saver Fund

The HDFC Tax Saver Fund is a mutual fund managed by HDFC Asset Management Company Limited, one of India’s leading asset management firms. The fund is classified as an equity-linked savings scheme (ELSS), which means that it is a diversified mutual fund that invests in a mix of stocks and bonds with the primary objective of generating long-term capital appreciation.

One of the key features of the HDFC Tax Saver Fund is that it offers tax benefits to investors under Section 80C of the Income Tax Act. This means that investors can claim a tax deduction of up to Rs. 1.5 lakh per year on their investments in the fund. This can be an attractive feature for investors looking to reduce their tax burden and potentially increase their returns on investment.

The HDFC Tax Saver Fund is suitable for investors who are looking for long-term capital appreciation and are willing to accept a moderate level of risk in their investment portfolio. The fund is classified as a high-risk, high-return investment and is not suitable for investors with a low-risk tolerance or short-term investment horizon.

The fund is managed by a team of experienced fund managers who use a bottom-up approach to stock selection. This involves thoroughly analyzing the financial health and growth prospects of individual companies, rather than relying on macroeconomic factors or market trends. Fund managers aim to identify companies with strong fundamentals, good management, and the potential to deliver long-term growth.

The HDFC Tax Saver Fund is a diversified fund that invests in a mix of large-cap, mid-cap, and small-cap stocks across various sectors. As of December 2021, the fund’s portfolio included companies from sectors such as banking, engineering, pharmaceuticals, and software. The fund aims to maintain a diversified portfolio to minimize risk and maximize returns.

The fund has a moderate level of volatility, which is to be expected with an equity-linked savings scheme. However, the fund has delivered strong returns for investors over the long term, with an annualized return of 19.2% over the past five years. The fund has also outperformed its benchmark, the Nifty 500 Index, over the same period.

In terms of risk management, the fund follows a conservative approach to investing and aims to minimize the impact of market volatility on the portfolio. Fund managers use various risk management techniques such as portfolio diversification and dynamic asset allocation to mitigate risk.

The HDFC Tax Saver Fund has an open-ended structure, which means that investors can buy or sell units of the fund at any time. The fund is suitable for investors who are looking to invest a lump sum or make systematic investments through a systematic investment plan (SIP). The minimum investment amount for the fund is Rs. 500, and investors can choose to invest through a one-time lump sum payment or through monthly SIP installments.

The fund has an expense ratio of 2.09%, which is relatively high compared to some other mutual funds. The expense ratio includes the management fees and other costs associated with running the fund. Investors should carefully consider the expense ratio when evaluating the fund and compare it to other options available in the market.

Overall, the HDFC Tax Saver Fund is a high-risk, high-return investment that is suitable for investors looking for long-term capital appreciation and the potential for tax savings. The fund is managed by a team of experienced fund managers and follows a bottom-up approach to stock selection. The fund has a diversified portfolio and has delivered strong returns for investors over the long term. However, investors should be aware of the fund’s high expense ratio and the potential for volatility.

ICICI Prudential Long-Term Equity Fund

ICICI Prudential Long Term Equity Fund is an open-ended equity scheme that primarily invests in a diversified portfolio of large and mid-cap stocks. The fund aims to achieve long-term capital appreciation by investing in companies with strong growth potential.

The fund is suitable for investors with a long-term investment horizon of at least 5-7 years and a high-risk tolerance. It is not suitable for investors with a short-term investment horizon or low-risk tolerance, as the value of the fund’s portfolio may fluctuate significantly in the short term due to market volatility.

The fund is managed by ICICI Prudential Asset Management Company, which is one of the leading asset management companies in India. The fund is part of the ICICI Prudential Mutual Fund family, which offers a wide range of investment options to suit the needs of different types of investors.

The fund’s investment strategy is based on the bottom-up approach, which involves identifying and selecting individual stocks based on their fundamental strength and growth potential. The fund’s portfolio is diversified across sectors and industries to reduce the overall risk of the portfolio.

The fund has a large-cap bias, with a significant portion of its assets invested in large-cap stocks. However, it also has exposure to mid-cap stocks, which can potentially provide higher returns in the long run. The fund’s portfolio is well-diversified, with holdings in sectors such as financial services, consumer goods, healthcare, and technology.

The fund has a solid track record of performance, with returns consistently outpacing the benchmark indices over different time periods. Over the past 5 years, the fund has generated an annualized return of 18.5%, compared to the benchmark index’s return of 15.7%. However, it is important to note that past performance is not indicative of future returns and the fund’s performance may vary in the future.

The fund has a moderate to high-risk profile, with a standard deviation of 15.3% over the past 5 years. This indicates that the fund’s returns may fluctuate significantly in the short term due to market volatility. The fund’s Sharpe ratio of 1.1 over the past 5 years suggests that the fund has been able to generate decent returns in relation to the risk taken.

The fund has an expense ratio of 1.69%, which is on the higher side compared to some other mutual funds in the same category. This means that a higher portion of the fund’s returns may be eroded by expenses, reducing the overall returns to the investor.

In conclusion, ICICI Prudential Long Term Equity Fund is a suitable investment option for investors with a long-term investment horizon and a high-risk tolerance. It offers the potential for long-term capital appreciation by investing in a diversified portfolio of large and mid-cap stocks. However, the fund has a moderate to high-risk profile and a higher expense ratio, which may impact the overall returns to the investor. It is important for investors to carefully consider their investment objectives, risk tolerance, and other financial factors before investing in the fund.

SBI Magnum Tax Gain Scheme

SBI Magnum Tax Gain Scheme is a mutual fund offered by the State Bank of India (SBI), one of India’s leading financial institutions. The fund is classified as a long-term capital gain fund, which means that it is designed to invest in securities that have the potential to generate long-term capital gains for investors.

One of the primary features of the SBI Magnum Tax Gain Scheme is that it aims to provide tax benefits to investors. In India, long-term capital gains on equity-oriented mutual funds are taxed at a lower rate compared to short-term capital gains. By investing in the SBI Magnum Tax Gain Scheme, investors can potentially benefit from lower tax rates on their capital gains.

The fund is suitable for investors who are looking for long-term capital appreciation and are willing to accept a moderate level of risk in their investment portfolio. The fund is managed by a team of experienced fund managers who use a bottom-up approach to stock selection. This involves thoroughly analyzing the financial health and growth prospects of individual companies, rather than relying on macroeconomic factors or market trends.

The SBI Magnum Tax Gain Scheme is a diversified fund that invests in a wide range of securities across various sectors. As of December 2021, the fund’s portfolio included companies from sectors such as banking, engineering, pharmaceuticals, and software. The fund aims to maintain a diversified portfolio to minimize risk and maximize returns.

The fund has a moderate level of volatility and has delivered strong returns for investors over the long term. Over the past five years, the fund has generated an annualized return of 17.5%. The fund has also outperformed its benchmark, the Nifty 500 Index, over the same period.

In terms of risk management, the fund follows a conservative approach to investing and aims to minimize the impact of market volatility on the portfolio. Fund managers use various risk management techniques such as portfolio diversification and dynamic asset allocation to mitigate risk.

The SBI Magnum Tax Gain Scheme has an open-ended structure, which means that investors can buy or sell units of the fund at any time. The fund is suitable for investors who are looking to invest a lump sum or make systematic investments through a systematic investment plan (SIP). The minimum investment amount for the fund is Rs. 5,000, and investors can choose to invest through a one-time lump sum payment or through monthly SIP installments.

The fund has an expense ratio of 1.91%, which is relatively low compared to some other mutual funds. The expense ratio includes the management fees and other costs associated with running the fund. Investors should carefully consider the expense ratio when evaluating the fund and compare it to other options available in the market.

Overall, the SBI Magnum Tax Gain Scheme is a long-term capital gain fund that is suitable for investors looking for long-term capital appreciation and tax benefits. The fund is managed by a team of experienced fund managers and follows a bottom-up approach to stock selection. The fund has a diversified portfolio and has delivered strong returns for investors over the long term. However, investors should be aware of the potential for market volatility and the importance of maintaining a long-term investment horizon.

Reliance Tax Saver Fund

The Reliance Tax Saver Fund is a mutual fund that is managed by Reliance Nippon Life Asset Management Limited, a leading asset management firm in India. The fund is classified as an equity-linked saving scheme (ELSS) and is designed to provide investors with long-term capital appreciation while also offering tax benefits.

ELSS funds are mutual funds that are eligible for tax deductions under Section 80C of the Income Tax Act. Investors can claim a deduction of up to Rs. 1.5 lakh ($2,000) per financial year on their investments in ELSS funds. This makes ELSS funds a popular choice for investors who are looking to save on taxes while also achieving long-term capital appreciation.

The Reliance Tax Saver Fund is a diversified fund that invests in a wide range of companies across various sectors. As of December 2021, the fund’s portfolio included companies from sectors such as banking, engineering, pharmaceuticals, and software. The fund aims to maintain a diversified portfolio to minimize risk and maximize returns.

The fund is managed by a team of experienced fund managers who use a bottom-up approach to stock selection. This involves thoroughly analyzing the financial health and growth prospects of individual companies, rather than relying on macroeconomic factors or market trends. Fund managers aim to identify companies with strong fundamentals, good management, and the potential to deliver long-term growth.

The Reliance Tax Saver Fund is suitable for investors who are looking for long-term capital appreciation and are willing to accept a moderate level of risk in their investment portfolio. The fund has a moderate level of volatility, which is to be expected with equity investments. However, the fund has delivered strong returns for investors over the long term, with an annualized return of 21.8% over the past five years. The fund has also outperformed its benchmark, the Nifty 500 Index, over the same period.

In terms of risk management, the fund follows a conservative approach to investing and aims to minimize the impact of market volatility on the portfolio. Fund managers use various risk management techniques such as portfolio diversification and dynamic asset allocation to mitigate risk.

The Reliance Tax Saver Fund has an open-ended structure, which means that investors can buy or sell units of the fund at any time. The fund is suitable for investors who are looking to invest a lump sum or make systematic investments through a systematic investment plan (SIP). The minimum investment amount for the fund is Rs. 500, and investors can choose to invest through a one-time lump sum payment or through monthly SIP installments.

The fund has an expense ratio of 1.81%, which is relatively low compared to some other mutual funds. The expense ratio includes the management fees and other costs associated with running the fund. Investors should carefully consider the expense ratio when evaluating the fund and compare it to other options available in the market.

Overall, the Reliance Tax Saver Fund is a good choice for investors who are looking for long-term capital appreciation and tax benefits. The fund is managed by a team of experienced fund managers and follows a bottom-up approach to stock selection. The fund has a diversified portfolio and has delivered strong returns for investors over the long term. However, investors should be aware of the potential for volatility and carefully consider the fund’s expense ratio before investing.

Aditya Birla Sun Life Tax Relief 96

Aditya Birla Sun Life Tax Relief 96 is an open-ended equity-linked savings scheme that was launched by Aditya Birla Sun Life Mutual Fund. This scheme aims to provide investors with the opportunity to save tax under Section 80C of the Income Tax Act, 1961, while also providing the potential for capital appreciation through investments in a diversified portfolio of equity and equity-related instruments.

The scheme follows a long-term investment approach, with a tenure of minimum of 5 years. It is suitable for investors who are looking to save tax while also seeking long-term growth through investments in the stock market.

The scheme has a moderate to high-risk profile, as it is exposed to the volatility of the stock market. However, the scheme aims to mitigate this risk through diversification and by investing in a mix of large-cap, mid-cap, and small-cap stocks.

The scheme has a lock-in period of 3 years, which means that investors cannot withdraw their investments before the completion of this period. However, the scheme provides the option of partial withdrawals after the completion of 1 year, subject to certain conditions.

The scheme has a diversified portfolio, with investments in a wide range of sectors such as banking, finance, pharmaceuticals, IT, and consumer goods. The scheme also follows a bottom-up approach, where individual companies are selected based on their potential for growth and value.

The scheme has a benchmark index of the S&P BSE Sensex and aims to outperform this index over the long term. The scheme has a fund manager, who is responsible for managing the portfolio and making investment decisions in line with the investment objective of the scheme.

The scheme charges an expense ratio of 1.35% per annum, which is on the higher side compared to other tax-saving schemes in the market. However, investors should note that the expense ratio is not the only factor to consider when evaluating a mutual fund scheme, and they should also consider the past performance of the scheme and the quality of the fund manager.

In terms of performance, the Aditya Birla Sun Life Tax Relief 96 has delivered consistent returns over the long term. As of December 2020, the scheme has generated a return of around 16% per annum over a 5-year period and around 17% per annum over a 10-year period. These returns are higher than the benchmark index, which has generated returns of around 13% per annum over the same time period.

Overall, the Aditya Birla Sun Life Tax Relief 96 is a good option for investors who are looking to save tax under Section 80C and seek long-term growth through investments in the stock market. However, investors should keep in mind that the scheme has a moderate to high-risk profile, and they should carefully consider their risk appetite and investment horizon before investing in this scheme.

DSP BlackRock Tax Saver Fund

The DSP BlackRock Tax Saver Fund is a mutual fund that is managed by DSP BlackRock Investment Managers Private Limited, a joint venture between DSP Group and BlackRock, Inc. The fund is classified as an equity-linked savings scheme (ELSS) and is designed to help investors save on taxes while also earning potential returns on their investments.

ELSS funds are a type of mutual fund that invests in a diversified portfolio of equity and equity-related instruments. They are eligible for tax deductions under Section 80C of the Income Tax Act in India, up to a maximum of Rs. 1.5 lakh per financial year. This means that investors can reduce their taxable income by investing in ELSS funds, effectively saving on taxes.

The DSP BlackRock Tax Saver Fund is suitable for investors who are looking for long-term capital appreciation and are willing to accept a higher level of risk in their investment portfolio. The fund is classified as a high-risk, high-return investment and is not suitable for investors with a low-risk tolerance or short-term investment horizon.

The fund is managed by a team of experienced fund managers who use a bottom-up approach to stock selection. This involves thoroughly analyzing the financial health and growth prospects of individual companies, rather than relying on macroeconomic factors or market trends. The fund managers aim to identify companies that have strong fundamentals, good management, and the potential to deliver long-term growth.

The DSP BlackRock Tax Saver Fund is a diversified fund that invests in a wide range of equity and equity-related instruments across various sectors. As of December 2021, the fund’s portfolio included companies from sectors such as banking, engineering, pharmaceuticals, and software. The fund aims to maintain a diversified portfolio to minimize risk and maximize returns.

The fund has a moderate to a high level of volatility, which is to be expected with equity investments. However, the fund has delivered strong returns for investors over the long term, with an annualized return of 18.4% over the past five years. The fund has also outperformed its benchmark, the Nifty 500 Index, over the same period.

In terms of risk management, the fund follows a conservative approach to investing and aims to minimize the impact of market volatility on the portfolio. Fund managers use various risk management techniques such as portfolio diversification and dynamic asset allocation to mitigate risk.

The DSP BlackRock Tax Saver Fund has an open-ended structure, which means that investors can buy or sell units of the fund at any time. The fund is suitable for investors who are looking to invest a lump sum or make systematic investments through a systematic investment plan (SIP). The minimum investment amount for the fund is Rs. 500, and investors can choose to invest through a one-time lump sum payment or through monthly SIP installments.

One of the main advantages of the DSP BlackRock Tax Saver Fund is that it offers investors the opportunity to save on taxes while also earning potential returns on their investments. By investing in the fund, investors can reduce their taxable income and effectively save on taxes. However, it is important to note that the tax implications of investing in the fund may vary depending on an investor’s individual tax bracket and other factors.

The fund has an expense ratio of 1.99%, which is relatively high compared to some other mutual funds. The expense ratio includes the management fees and other costs associated with running the fund. Investors should carefully consider the expense ratio when evaluating the fund and compare it to other options available in the market.

Overall, the DSP BlackRock Tax Saver Fund is a high-risk, high-return investment that is suitable for investors looking for high risks and high returns

Axis Long-Term Equity Fund

Axis Long-Term Equity Fund is a diversified equity mutual fund that aims to provide long-term capital appreciation by investing in a diversified portfolio of equities and equity-related instruments. The fund is suitable for investors with a long-term investment horizon of 5-7 years or more and a moderate to high-risk appetite.

The fund is managed by Axis Asset Management Company, one of the leading asset management companies in India with a strong track record in managing equity mutual funds. The fund is benchmarked against the Nifty 500 Index and follows a value investing approach.

The fund invests predominantly in large-cap and mid-cap stocks and follows a bottom-up approach to stock selection. The fund manager conducts in-depth research on the financials, management, and competitive positioning of the companies before adding them to the portfolio. The fund also follows a well-diversified investment strategy and aims to maintain a diversified portfolio of around 50-60 stocks.

One of the key strengths of the Axis Long-Term Equity Fund is its strong risk management process. The fund has a robust risk management framework in place that helps in identifying and mitigating various risks associated with equity investments. The fund manager also follows a dynamic asset allocation strategy and adjusts the portfolio based on the market conditions and the risk appetite of the investors.

The fund has a consistent track record of outperforming its benchmark and delivering superior returns to its investors. As on June 30, 2021, the fund has delivered an annualized return of 16.50% over the past 5 years, outperforming its benchmark by a margin of 4.90%. The fund has also consistently ranked among the top performers in its category and has received several accolades and awards over the years.

The fund is suitable for investors looking to invest in a diversified equity mutual fund with a long-term investment horizon. The fund is ideal for investors who are looking to diversify their portfolio and are willing to take moderate to high risk in order to achieve long-term capital appreciation.

However, like all equity mutual funds, the Axis Long-Term Equity Fund also carries a certain level of risk. The fund’s performance is dependent on the performance of the stock market and the individual stocks in its portfolio. There is always a possibility of capital loss if the stock market or individual stocks underperform. Therefore, it is important for investors to have a long-term investment horizon and a moderate to high-risk appetite before investing in the fund.

In conclusion, the Axis Long-Term Equity Fund is a well-managed, diversified equity mutual fund that aims to provide long-term capital appreciation by investing in a diversified portfolio of equities and equity-related instruments. The fund has a strong risk management process in place and follows a value investing approach to stock selection. The fund has a consistent track record of outperforming its benchmark and delivering superior returns to its investors. The fund is suitable for investors looking to invest in a diversified equity mutual fund with a long-term investment horizon and a moderate to high-risk appetite.

UTI Equity Tax Savings Fund

UTI Equity Tax Savings Fund is a mutual fund offered by UTI Asset Management Company Limited, one of the leading asset management firms in India. The fund is designed to provide investors with an opportunity to save on taxes while also generating long-term capital appreciation.

The fund is classified as an equity-oriented hybrid fund, which means that it invests a significant portion of its assets in equity and equity-related instruments. The fund also has the flexibility to invest in debt instruments, which helps to manage risk and provide stability to the portfolio.

One of the primary benefits of investing in the UTI Equity Tax Savings Fund is the tax savings it offers. The fund is eligible for tax benefits under Section 80C of the Income Tax Act, which allows investors to claim a tax deduction on their investment up to a maximum of Rs. 1.5 lakh ($2,000) per financial year. This makes the fund an attractive option for investors who are looking to reduce their tax liability while also generating returns on their investments.

The UTI Equity Tax Savings Fund is suitable for investors who are looking for long-term capital appreciation and are willing to accept a moderate level of risk in their investment portfolio. The fund is not suitable for investors with a low-risk tolerance or short-term investment horizon.

The fund is managed by a team of experienced fund managers who use a blend of top-down and bottom-up approaches to stock selection. This involves analyzing macroeconomic factors and market trends as well as thoroughly evaluating the financial health and growth prospects of individual companies. Fund managers aim to identify companies with strong fundamentals, good management, and the potential to deliver long-term growth.

The UTI Equity Tax Savings Fund is a diversified fund that invests in a wide range of equity and equity-related instruments across various sectors. As of December 2021, the fund’s portfolio included companies from sectors such as banking, engineering, pharmaceuticals, and software. The fund aims to maintain a diversified portfolio to minimize risk and maximize returns.

The fund has a moderate level of volatility, which is to be expected with equity investments. However, the fund has delivered strong returns for investors over the long term, with an annualized return of 15.3% over the past five years. The fund has also outperformed its benchmark, the Nifty 500 Index, over the same period.

In terms of risk management, the fund follows a conservative approach to investing and aims to minimize the impact of market volatility on the portfolio. Fund managers use various risk management techniques such as portfolio diversification and dynamic asset allocation to mitigate risk.

The UTI Equity Tax Savings Fund has an open-ended structure, which means that investors can buy or sell units of the fund at any time. The fund is suitable for investors who are looking to invest a lump sum or make systematic investments through a systematic investment plan (SIP). The minimum investment amount for the fund is Rs. 500, and investors can choose to invest through a one-time lump sum payment or through monthly SIP installments.

The fund has an expense ratio of 2.02%, which is relatively high compared to some other mutual funds. The expense ratio includes the management fees and other costs associated with running the fund. Investors should carefully consider the expense ratio when evaluating the fund and compare it to other options available in the market.

Overall, the UTI Equity Tax Savings Fund is a suitable option for investors looking to save on taxes while also generating long-term capital appreciation. The fund is managed by a team of experienced fund managers and follows a blend of top-down and bottom-up approaches to stock selection. The fund has a diversified portfolio and has delivered strong returns for investors over the long term.

Kotak Tax Saver Fund

The Kotak Tax Saver Fund is a mutual fund offered by Kotak Mahindra Asset Management Company Limited, one of the leading asset management companies in India. The fund is suitable for investors who are looking to save tax while also growing their wealth over the long term. It is classified as an Equity-Linked Savings Scheme (ELSS) and comes with a lock-in period of three years.

The Kotak Tax Saver Fund is primarily invested in equity and equity-related instruments of companies across various sectors. The fund follows a bottom-up approach to stock selection, focusing on companies that have strong fundamentals, good management, and growth potential. The fund aims to provide long-term capital appreciation to its investors through a diversified portfolio of high-quality companies.

The Kotak Tax Saver Fund has a moderate risk profile, which makes it suitable for investors with a moderate risk appetite. It has an experienced fund manager, Mr. R. Sivakumar, who has been managing the fund since its inception in 2006. Under his management, the fund has consistently performed well and has delivered strong returns to its investors.

One of the key features of the Kotak Tax Saver Fund is that it offers tax benefits to its investors. As an ELSS fund, it is eligible for a tax deduction of up to Rs. 1.5 lakh per year under Section 80C of the Income Tax Act, 1961. This means that investors can save tax on their investments in the fund, making it a tax-efficient investment option.

The Kotak Tax Saver Fund has a performance track record of delivering consistent returns to its investors. As of June 2021, the fund has delivered a return of 18.02% per annum over the past five years, which is higher than the benchmark index (Nifty 500) return of 15.06% per annum. The fund has also outperformed its peers in the ELSS category, with a return of 18.02% per annum compared to the category average of 14.64% per annum.

One of the reasons for the fund’s strong performance is its diversified portfolio of high-quality companies. The fund’s top holdings include blue chip companies such as HDFC Bank, Reliance Industries, and TATA Consultancy Services, which have strong growth potential and have delivered consistent returns to investors.

The Kotak Tax Saver Fund has a relatively low expense ratio of 1.45%, which is lower than the industry average. This means that investors pay lower fees to the fund, which helps to improve their overall returns.

The Kotak Tax Saver Fund is suitable for investors with a long-term investment horizon of at least five years. The fund is suitable for investors who are looking to save tax while also growing their wealth over the long term. It is also suitable for investors who are looking for a diversified portfolio of high-quality companies and are willing to take on moderate risk.

Investors can invest in the Kotak Tax Saver Fund through various modes, such as lump sum investment or systematic investment plan (SIP). SIP is a convenient and hassle-free way of investing in the fund, where investors can invest a fixed amount at regular intervals instead of making a lump sum investment. This helps to average out the cost of investment and reduce the risk of market fluctuations.

In conclusion, the Kotak Tax Saver Fund is a tax-efficient investment option for investors who are looking to save tax while also growing their wealth over the long term. The fund has a strong performance track record and is managed by an experienced fund manager. Its diversified portfolio of high-quality companies and low expense ratio make it an attractive investment option

Birla Sun Life Tax Relief 96 Fund

Birla Sun Life Tax Relief 96 Fund is a mutual fund that is managed by Birla Sun Life Asset Management Company, a leading asset management firm in India. The fund is classified as an Equity Linked Savings Scheme (ELSS) and is designed to provide investors with tax benefits under Section 80C of the Income Tax Act.

ELSS funds are a popular investment option for investors who are looking to save on taxes while also earning potential returns on their investments. ELSS funds offer tax benefits of up to Rs. 1.5 lakh ($2,000) per financial year, which can significantly reduce an investor’s tax liability.

The Birla Sun Life Tax Relief 96 Fund is a diversified fund that invests in a mix of large-cap, mid-cap, and small-cap stocks across various sectors. As of December 2021, the fund’s portfolio included companies from sectors such as banking, pharmaceuticals, engineering, and software. The fund aims to maintain a diversified portfolio to minimize risk and maximize returns.

The fund is managed by a team of experienced fund managers who use a bottom-up approach to stock selection. This involves thoroughly analyzing the financial health and growth prospects of individual companies, rather than relying on macroeconomic factors or market trends. Fund managers aim to identify companies with strong fundamentals, good management, and the potential to deliver long-term growth.

The Birla Sun Life Tax Relief 96 Fund is a high-risk, high-return investment that is suitable for investors looking for long-term capital appreciation. The fund has a moderate to a high level of volatility, which is to be expected with equity investments. However, the fund has delivered strong returns for investors over the long term, with an annualized return of 18.7% over the past five years. The fund has also outperformed its benchmark, the Nifty 500 Index, over the same period.

In terms of risk management, the fund follows a conservative approach to investing and aims to minimize the impact of market volatility on the portfolio. Fund managers use various risk management techniques such as portfolio diversification and dynamic asset allocation to mitigate risk.

The Birla Sun Life Tax Relief 96 Fund has an open-ended structure, which means that investors can buy or sell units of the fund at any time. The fund is suitable for investors who are looking to invest a lump sum or make systematic investments through a systematic investment plan (SIP). The minimum investment amount for the fund is Rs. 500, and investors can choose to invest through a one-time lump sum payment or through monthly SIP installments.

The fund has an expense ratio of 2.01%, which is relatively high compared to some other mutual funds. The expense ratio includes the management fees and other costs associated with running the fund. Investors should carefully consider the expense ratio when evaluating the fund and compare it to other options available in the market.

Overall, the Birla Sun Life Tax Relief 96 Fund is a high-risk, high-return investment that is suitable for investors looking for long-term capital appreciation and tax benefits. The fund is managed by a team of experienced fund managers and follows a bottom-up approach to stock selection. The fund has a diversified portfolio and has delivered strong returns for investors over the long term. However, investors should be aware of the fund’s high expense ratio and the potential for volatility.

How to select an ELSS Mutual Fund

Here are a few tips for selecting an ELSS mutual fund:

1. Consider the fund’s performance: Look at the fund’s past performance over a long-term period, such as three to five years, to get a sense of its track record. However, it is important to note that past performance is not indicative of future results.
2. Review the fund’s holdings: Check the fund’s portfolio to see what types of companies it invests in and whether they align with your investment goals.
3. Consider the fund’s expense ratio: ELSS Mutual Fund typically have a higher expense ratio compared to other mutual funds due to the costs associated with the tax-saving feature. Consider the expense ratio when evaluating different funds to ensure you are not overpaying for the tax benefits.
4. Research the fund manager: Look into the ELSS Mutual Fund manager’s experience and track record to see if they have a good reputation and a solid understanding of the market.
5. Consider your investment horizon: ELSS Mutual Funds have a lock-in period of three years, so consider how long you are willing to commit to the investment before making a decision.

It is also recommended to consult with a financial advisor or professional to determine the best ELSS mutual fund for your investment goals and risk tolerance.

Benefits of an ELSS Mutual Fund

An Equity Linked Savings Scheme (ELSS) mutual fund is a type of mutual fund that is designed to provide investors with tax benefits under Section 80C of the Income Tax Act in India. ELSS Mutual Funds are a popular investment option for investors who are looking to save on taxes while also earning potential returns on their investments.

There are several benefits to investing in an ELSS mutual fund:

1. Tax benefits: ELSS Mutual Fund offers tax benefits of up to Rs. 1.5 lakh ($2,000) per financial year, which can significantly reduce an investor’s tax liability. This makes ELSS funds an attractive option for investors who are looking to save on taxes.
2. Diversified portfolio: ELSS Mutual Funds invest in a mix of large-cap, mid-cap, and small-cap stocks across various sectors, providing investors with a diversified portfolio. This helps to minimize risk and maximize returns.
3. Long-term capital appreciation: ELSS Mutual Funds are suitable for investors looking for long-term capital appreciation. These funds have the potential to deliver higher returns compared to other investment options such as fixed deposits or savings accounts.
4. Flexibility: ELSS funds have an open-ended structure, which means that investors can buy or sell units of the fund at any time. This provides investors with flexibility and allows them to adjust their investment portfolio as their financial goals and risk tolerance change.
5. Professional management: ELSS Mutual Funds are managed by experienced fund managers who use a bottom-up approach to stock selection. This involves thoroughly analyzing the financial health and growth prospects of individual companies, rather than relying on macroeconomic factors or market trends.
6. Systematic investment plans: ELSS Mutual Fund allows investors to make systematic investments through a systematic investment plan (SIP). This allows investors to invest small amounts on a regular basis, rather than making a lump sum investment. This can be a convenient option for investors with limited funds or those who prefer to spread out their investments over time.

Overall, ELSS mutual funds offer investors a combination of tax benefits, diversification, long-term capital appreciation, flexibility, professional management, and the option of systematic investments. These factors make ELSS mutual funds an attractive investment option for many investors.

Drawbacks of an ELSS Mutual Fund

An Equity Linked Savings Scheme (ELSS) mutual fund is a type of mutual fund that offers tax benefits to investors under Section 80C of the Income Tax Act. While ELSS funds can be a useful tool for investors looking to save on taxes and earn potential returns on their investments, there are several drawbacks to consider.

1. High risk: ELSS Mutual Funds are classified as high-risk, high-return investments, as they invest in a mix of stocks and equity-related instruments. The value of these investments can fluctuate significantly based on market conditions and company performance, which can lead to a high level of volatility. As a result, ELSS funds may not be suitable for investors with a low-risk tolerance or short-term investment horizon.
2. Long lock-in period: One of the main drawbacks of ELSS Mutual Fund is the long lock-in period of three years. This means that investors cannot sell or withdraw their investments before the completion of three years. This can be a disadvantage for investors who may need access to their funds in the short term or who may need to adjust their investment strategy based on changing market conditions.
3. Limited tax benefits: While ELSS Mutual Fund offers tax benefits of up to Rs. 1.5 lakh ($2,000) per financial year, may not be the most tax-efficient investment option for high-net-worth individuals or those in higher tax brackets. Other investment options such as the public provident fund (PPF) or national pension system (NPS) may offer more tax benefits for higher-income earners.
4. High expense ratio: ELSS Mutual Fund typically has a high expense ratio, which is the percentage of assets that are used to cover the fund’s management and operational costs. The expense ratio can significantly impact the overall returns of an investment, and investors should carefully consider the expense ratio when evaluating an ELSS Mutual Fund.
5. Limited diversification: Some ELSS Mutual Funds may have a narrow focus and may not offer a broad range of investment options. This can limit the diversification of an investment portfolio and increase the risk of potential losses.

Overall, while ELSS Mutual Fund can be a useful tool for investors looking to save on taxes and earn potential returns on their investments, they come with a high level of risk and may not be suitable for all investors. Investors should carefully consider the drawbacks and consult with a financial advisor before making any investment decisions.

Is ELSS tax free after 3 years?

Equity Linked Savings Scheme (ELSS) mutual funds offer tax benefits to investors under Section 80C of the Income Tax Act. ELSS Mutual Fund offer tax benefits of up to Rs. 1.5 lakh ($2,000) per financial year, which can significantly reduce an investor’s tax liability.

One of the main features of ELSS Mutual Fund is the long lock-in period of three years. This means that investors cannot sell or withdraw their investments before the completion of three years. However, the tax benefits of ELSS Mutual Funds are not restricted to the lock-in period.

Once the lock-in period is completed, investors can sell or withdraw their investments from ELSS Mutual Fund without incurring any tax liability. The capital gains from the sale of ELSS units are tax-free for investors, provided the units are held for more than three years.

For example, if an investor buys units of an ELSS Mutual Fund for Rs. 50,000 and sells them after three years for Rs. 100,000, the capital gain of Rs. 50,000 is tax-free. However, if the units are sold before the completion of three years, the capital gain is taxed at the applicable rate, which is currently 10% for short-term capital gains (STCG) and 20% for long-term capital gains (LTCG) over Rs. 1 lakh.

It’s important to note that while the capital gains from ELSS Mutual Fund are tax-free after three years, the dividends received from the fund are subject to tax. Dividends are taxed at the applicable rate, which is currently 10% for individuals and HUFs.

Overall, ELSS Mutual Fund offers tax benefits to investors and provides tax-free capital gains after the completion of the lock-in period. However, investors should be aware of the tax implications of dividends received from the fund and consult with a financial advisor for personalized tax planning advice.