Which is the best ELSS Mutual Fund for 2012?

by Hemant Beniwal on November 29, 2011

Which is the Mutual Fund for ELSS or which is the best Mutual Fund for SIP or which is the best term plan? This is the most common trick to ask secrets from Hemant. icon smile Which is the best ELSS Mutual Fund for 2012? And as usual my answer is “There is nothing called best – best comes after postmortem”.

If you don’t have much idea about Mutual Fund ELSS (Equity Linked Saving Scheme) – You should read ELSS the best instrument for saving tax.

Do you know “Average Equity markets in US have given return of 9.14% from 1991 to 2010 but what investor got was just 3.27%.”

Can you guess why this happened? Because people were looking for BEST FUNDS & not concentrating on other factors which are more important. Read Secret of achieving high returns.

But won’t you like to ask what happened if someone made investments when the sensex touched its highest point. If someone had invested Rs 10000 in ELSS Fund on 9th January 2008 (Sensex 20800) & withdrawn it after 3 years on 10th Jan 2011 (Sensex 19100).

 elss returns 3 years Which is the best ELSS Mutual Fund for 2012?

So couple of funds have given negative returns in this period & if you notice in middle of this period funds even lost almost 50% of their value. Equity is the most volatile asset class & it always work like this – if you don’t have risk appetite or if you want that your investments should never go negative, please don’t invest in equity or equity related instruments. Read – Which is the best place to invest?

So we have seen a single period but this cannot be much helpful in any judgment. Let’s see what happened in all 3 year periods since ELSS came to existence – for that we have to understand rolling returns.

Definition of Rolling Returns: The annualized average return for a period ending with the listed year. Rolling returns are useful for examining the behavior of returns for holding periods similar to those actually experienced by investors.

3 year rolling return of ELSS

For example, the three-year rolling return for 1996 covers Jan 1, 1993, through Dec 31, 1996. The three-year rolling return for 1996 is the average annual return for 1993 through 1996.

elss rolling 3 years Which is the best ELSS Mutual Fund for 2012?

So you can see there are couple of negative periods here – all 3 year period that are starting from a peak of bull market. Most sever, almost a 30% negative in 1997 because this is talking about investments done at the time of Harshad Mehta’s Scam (1993).

5 year rolling return of ELSS

If we look at 5 year period there is no negative period but return in 1998 are almost close to zero & again thanks to Mr Harshad Mehta. If you do a Prima Facie observation – on an average investments has given more than 100% return or doubled in period of 5 years.

elss rolling 5 years Which is the best ELSS Mutual Fund for 2012?

If you look both the rolling charts there are a two important learning:

First, with increase in investment horizon (3 to 5 years) volatility substantially reduces.

Second, investments done when actual returns were negative have generated a good return. (Check 3 year period)

But question is which fund to invest.

Best ELSS Mutual Fund for 2012

This is just a list of 10 tax saving mutual funds – you can take a decision with your own research. ()

 Long term Performance of ELSS Funds (absolute return)elss returns long term Which is the best ELSS Mutual Fund for 2012?

Year on year of ELSS Funds

elss year on year returns Which is the best ELSS Mutual Fund for 2012?

ReadWhat will happen to ELSS after new direct tax code?

If you have any query relating to ELSS or tax saving – feel free to ask.

But please don’t ask which is the “Best ELSS Mutual Fund”. icon wink Which is the best ELSS Mutual Fund for 2012?

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{ 39 comments… read them below or add one }

1 Anil Kumar Kapila

Hi Hemant
It is good that you have provided links to your post- Secret Of Achieving High Returns as well as Manshu’s post-Which is the best place to invest?
Although I had gone through these posts earlier, I read these posts again and found them very useful.
You have rightly mentioned that there is no best investment or plan. Having correct asset allocation is the key.
Investing is a dynamic process and it is not one time activity. Monitoring all asset classes in your portfolio regularly and rebalancing is important.

Reply

2 Hemant Beniwal

Dear Anil,
“You have rightly mentioned that there is no best investment or plan. Having correct asset allocation is the key.
Investing is a dynamic process and it is not one time activity. Monitoring all asset classes in your portfolio regularly and rebalancing is important.”
I don’t know why people don’t understand this – even you have contributed an article which speaks about a process to select funds “Best MF for SIP” – but I think this has not solved any purpose. Still people need spoon feeding or instant gratification. :(

Reply

3 Srikanth

HI, Hemant,
Surprised that there is no Religare Tax Plan here.
How come you missed that???
I hope not just because that is from a small AMC, you have skipped it….

Reply

4 Hemant Beniwal

Hi Srikanth,
You are right. My list was not of best performing funds – its just a random list.

Reply

5 ANIL KUMAR KAPILA

Hi Srikant
No doubt Religare Tax Plan is a highly rated fund. It is not possible for anyone to cover all the fund houses. Some criteria has to be used while selecting fund houses.

Reply

6 Prasanth

Hi Hemant,
I have some 2 L Rupees, I am planning to invest this on bank (Local Source) I will get 15% interest on every year. so after 7 years it will be double.

Another I want to save rs 10000 every month in PPF or RD or after read this website i would like to know more on mutual Funds and how to invest this in MF or PPF

for the above 2 L as well I need to know do I have any other option to invest.

Thanks

Reply

7 Srikant

You could as well as look at Muthoot NCD which would also give the same return with the added benefit of Liquidty through its Listing

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8 ANIL KUMAR KAPILA

Hi Prasanth
I am not aware of any bank which gives annual interest of 15%. Please read the post-Best Mutual Fund For SIP.

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9 Sunitha

Hi Hemanth,
I came to know about TFL only recently just one week back while googling.I almost went through all of your blogs.Its all very informative and quite intresting.Only thorugh TFL i learnt about ELSS and SIP mutual funds.Keep up the good work.

I have a question.I haven’t done any investment plans this year(2011-2012).So under 80c my taxable income is 70000(after deducing PF contribution). So, i am planning to invest in ELSS. Could you please suggest me whether it is fine to invest whole of this amount in ELSS or do i need to split the amount for some other investment.If ELSS which one do i need to opt for 70000.Please suggest.

Reply

10 Hemant Beniwal

Hi Sunitha,
You can split your investment between PPF & ELSS.

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11 Ankur Sinha

I have a question regarding ELSS, Suppose I have a folio of ELSS mutual fund on my spouse name and I pay to buy the units. Can I claim this on my 80c ? or it will be my spouse 80c.

Reply

12 Hemant Beniwal

Hi Ankur,
You can’t claim this for your 80 C.

Reply

13 amish

dear sir if i shift my div. eq mf units to elss of same amc can i claim ded u/s 80 c? regards amish

Reply

14 Hemant Beniwal

Hi Amish,
Definitely you can do this :)

Reply

15 Sunitha

Hi Hemanth,
As suggested by you i have opened a PPF account and invested 20% in PPF.Remaining 80% i would like to invest in ELSS mutual fund.I would also like to start SIP mutual fund from coming month 5000 per month.I am starting both of these for long term investment(min 5 years).Please have a look at my portfolios.

For ELSS mutual funds(50000)
1.Fidelity Tax advantage(20000)
2.Franklin Templeton franklin india taxshield(20000)
3.HDFC tax saver(10000)

Portfolio for SIP(5000 per month)
1. DSP BlackRock Top 100 Equity(2000)
2. HDFC Top 200(2000)
3. Quantum Long Term Equity(1000)

My Demat will be ready by tomorrow.So before starting i would like to take your suggestion as this is the first time i am trading mutual funds.Please suggest, if there should be any additions/deletions for the above portfolios.

Thanks in advance.

Reply

16 Ram

Hi friend,
I Planned to invest in fidelity Tax advantage through SIP(monthly 5000rs) but I have doubt,after march 31,how to proceed with this ELSS since it wont be useful for next year Tax saving because of DTC..can You explain me…?Thank you,Dr.ramesh.

Reply

17 sanjeev

Hi friend,

I would like to invest 3000 per month in Elss.Please suggest me best option for this.I have to save my tax as well as buy house after 3 years.

Pls reply soon…. Thanks sanjeev

Reply

18 Dr Ramesh

Dear friend,
your Blog very useful..first of all..I started my ELSS from this month in two ELSS plans namely HDFC tax gainer and Fidelty Tax advantage..each rs.2000 per month ..But I have doubt,what happens If government stops ELSS in the following financial Year wef 01.04.2012because of DTC?how to proceed with these plans..?thank you.

with regards…

Dr.ramesh..

Reply

19 ABHIJIT

I am very new to MF . Thinking to invest in SBI emerging business (Rs 3000) and SBI Magnum Income fund ( Rs 3000) per month on a SIP basis .Please advice .

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20 Vikrant

Hi Hemant
I have invested in Fidelity Advantage Tax Fund. As per current news, fidelity AMC is selling its India business, so what should be our move?
Either to continue with investments in Fidelity Advantage Tax Fund or to stop the future investments in fidelty funds?

Reply

21 Hemant Beniwal

Hi Vikrant,
There is no need to panic & sell this fund. Its not like stocks that company is selling down :)

Lets see are they really selling it, are there any fund management changes & who is the buyer. We will see all these things happening over a period of time & if required you can take any action.

Reply

22 Phani

Please respond to questions asked above like, will i get Taxbenifit if i start investing in ELSS from this month for 3 yrs though DTC comes into effect from April

Reply

23 Hemant Beniwal

Hi Phani,
Will suggest you to read this article
http://www.tflguide.com/2011/11/elss-after-new-direct-tax-code-dtc.html

Reply

24 Kamati

Hi Hemanth,

I have taken Idfc Tax Adv (elss) Fund – Gr with Amount of Rs 30K in Jan 11. How is this perfromimg? How much returns I may expect after 3 years & 5 years on this as I am planning to inevets around 30K MF this year also?

Regards,
Kamati

Reply

25 RAJASHEKAR

sir
pls suggest me for a SIP for 10-15 yrs,as of now i have no SIP.

Reply

26 seenu

phew
budget is out …waiting for ur insights and outputs
what i get it is that ELSS will continue its benefits and 20000 infrabonds additional will be out.

please clarify two doubts:
Will infrabonds shut down now…with no takers and what to do if already i have taken for 2011-12..will i be affected

ELSS v/s regular MF…apart from tax saving aspect, is there any differnce in performance, returns…

.if we have good MF by SIP , should I go for ELSS or seek other options

thanks

Reply

27 Hemant Beniwal

Hi Seenu,
There is no change in ELSS & infrabonds.

Reply

28 seenu

Thanks Hemant
As per TOI(17 mar) infrabonds 20000 under 80 ccf removed. Please give ur expert opinion.

As regards the other question, since ELSS would continue, and I have regular SIP in mutual funds, should I take ELSS or not

Thank you

Reply

29 Preet

Dear Sir
I want to invest in ELSS via SIP from April2012. I don’t have any investments yet in ELSS. Should I start with it now? whether SIP is better or lumpsum, in ELSS?
Please guide.
Thank You

Reply

30 rahul

hello hemant

could you please suggest me some elss funds for tax saving advantage.

Reply

31 ajith

sir i have the following mutual fund investment:
all sips-
birla mnc -1000,hdfc midcap-2000,sbi emerging bussiness-2000
icici fmcg -1000,sbi fmcg-1000,reliance banking -2000
can robecoinfrastructure-3000
icici focc bluchip-2000, uti opp -2000
icici tax saver-3000, hdfc tax saver-3000

please analyse my portfolio and give your valuble comments… i am expecting 15% returns in 15 years.

Reply

32 niranjan

Hello sir,
I m start my SIP in Tarus tax shild growth plain 500/m, HDFC tax sever 500/m,ICICIprudential tax plan 1000/m & reliance gold seveing fund 1000/m from april 2012. please guide me about my portfolio is it right or my change in this

Thanks

Reply

33 Praveen kumar

Hi Hemanth,

My age is 30 years, I would like to invest 5k per month through SIP in ELSS for long term at least for 10 years. Could you please specify the best funds to invest which gives good returns in long term.

Thanks in Advance

Reply

34 vishwanath

Dear Sir
I have invested 40 thousand in LIC, AND 60 thousand in PPF, I want t0 invest in mutual funds also. Should i shift the money from PPF to ELLS mutual fund or should i take separate mutual funds. What is the advantage of pure equity mutual fund vs ELSS

Reply

35 Vikas

Dear Vishwanath,

PPF and ELSS are both different instruments having their risk return characteristics. PPF is a recommended tool for long term planning and so not advisable to discontinue. ELSS is good wrt the returns it generate from equity markets. However, you should be very clear before investing as unlike PPF the product has its higher risk return characteristics.

ELSS is a very specific category created for 80C investments and so it has a locking for three years while in any open ended mutual fund sale/repurchase option is available throughout the year.

Reply

36 Abhi

Hi Hemanth,

I had invested in HDFC Tax Saver and SBI Magnum Tax Saving mutual funds in SIP mode in the FY Year 2008-09. Could you please let me know as per your opinion when is the best time to redeem it as it has already passed the 3 year lock-in period.

Reply

37 Vikas

Hi Abhi,

When you achieve your objective that’s the best time to redeem any mutual fund.

Reply

38 Abhishek

Hi Hemant,

This article was very useful. I am very new to mutual funds. I want to invest Rs. 2000 pm in ELSS SIP. Can you please suggest which fund should I opt for?

Please suggest.

Thanks and regards,
Abhishek

Reply

39 Anusha Shashidhar

Hi, Hemanth!
Is it okay to invest in a scheme that has not rated been rated by CRISIL, if it is from a reputed fund house?

Reply

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