You will agree that Mutual Funds are like chocolates – there are so many different kinds & new are always popping up. How are you supposed to decide where to invest?
I am not sure if I will be able to answer “Which is the best tax saver mutual fund in India?” but I promise this post will help you in selecting the right one for your tax planning needs.
There were a couple of questions related to Tax Saving Mutual Fund or ELSS that I keep getting on the blog. So I asked Anil Kumar Kapila (He is an avid follower of TFL & a knowledgeable guy – he always try to help other readers by solving their personal finance queries) to share his views on the same – I have Just added performance charts, tables, images & video.
Check performance of Best Tax Saving Mutual Funds in last three years.
Tax Saving Mutual Funds
End of the financial year is around the corner. It is the time when the salaried invest to save tax. For those investors who have not done their tax planning hardly any time is left. Eleventh-hour tax planners must be now looking for tax saving instruments to park their funds to claim income tax deductions. The tax saving mutual fund is one such instrument.
Tax Saving Mutual Funds are popularly known as Equity Linked Saving Schemes (ELSS). They serve the purpose of combining tax benefits with wealth creation using equities. They are basically meant for tax saving but over the last few years, investors in these funds have tremendously grown their wealth. Some ELSS funds have been top performers and consistently outperformed the Sensex.
Oops.. but I have to share this before going forward.. Mutual Funds write this in bold “Past Performance may or may not be sustained in future.” But who cares..
Check – ELSS or PPF Which is better?
Note – Ignore numbers – try to understand the power of equity.
Tax Saving Mutual Fund Vs Diversified Equity Fund
ELSS funds follow the same investment strategy as diversified equity funds. They invest in a portfolio of quality stocks chosen without any market capitalization or sector bias. Investment in ELSS is locked-in for a period of three years from the date of investment. Three- year lock-in period works in favor of these funds. Fund managers can take longer calls and deploy funds without the fear of premature redemption. Because of the stability of the corpus, a higher proportion of assets can be deployed for mid and small caps to get superior returns.
Check 1 Year Rolling Return – year wise – elss fund category
Check 3 Year Rolling Return – tax saver fund
Who should invest in Tax Saving Mutual Fund?
Investors should go for these funds only if their main aim is to save tax. ELSS funds do not allow you to book profits when markets are rising due to the lock-in period.
Since ELSS schemes invest in equity, over longer investment horizons, they deliver the highest long term returns among other tax saving investments. These are suitable for investors with a long investment horizon of more than five years. As these are equity linked schemes, investors should have a higher risk appetite than pure debt investors.
Best Tax Saving Mutual Fund
An optimal way to invest in tax saving mutual funds is by way of monthly SIPs. A large number of tax saver mutual funds are available in the market. Not all are equally good. One must be selective in choosing the right fund. Not more than two funds should be chosen.
|Best Tax Saving Mutual Fund 2017||1yr||3yr||5yr||10yr|
|Axis Long Term Equity||15.66||21.68||21.46|
|Birla Sun Life Tax Plan||19.65||21.70||18.61||11.77|
|Birla Sun Life Tax Relief||20.69||22.64||19.38||12.32|
|DSP BlackRock Tax Saver||31.33||23.72||19.92||15.51|
|Franklin Templeton Franklin India Taxshield||20.67||21.73||17.81||15.13|
|ICICI Prudential Long Term Equity Tax Saving||24.76||20.32||18.11||14.39|
|IDBI Equity Advantage Regular||15.17||23.47|
|Sector : Ind VR Equity Tax Planning||26.05||19.75||16.21||11.68|
|Invesco India Tax Plan||22.29||21.70||18.38||16.19|
|Principal Tax Savings – DIV||30.93||21.14||19.04||10.00|
|Reliance Tax Saver ELSS||28.66||26.10||20.31||14.89|
|Tata India Tax Savings – DIV||24.62||22.64||18.04||13.09|
I have also kept this old list so you can compare.
Best Tax Saving Mutual Fund 2013
|Axis Long Term Equity||29.48||14.26|
|Canara Robeco Equity Tax Saver||28.40||10.13||6.32||25.07|
|Franklin India Taxshield||26.98||10.38||4.71||25.81|
|HDFC LT Advantage||27.76||8.45||2.99||26.81|
|ICICI Prudential Tax Plan||31.92||9.35||4.74||28.79|
|IDFC Tax Advantage ELSS||33.59||9.27|
|L&T Tax Advantage||23.91||8.75||4.24|
|Quantum Tax Saving||30.84||10.72|
|Reliance Tax Saver||36.30||9.89||4.26|
|Religare Tax Plan||27.02||8.62||3.79|
Tax Saving Mutual Fund Schemes – more detail
ELSS is the only tax saving instrument that is pure equity oriented and has the least number of years as lock-in period.
This is a guest post by Anil Kumar Kapila – the views expressed herein are the author’s personal views. The funds that are shown as Best Tax Saving Mutual Fund or top 10 are 4 & 5 star rated funds from Value Research.
In case you have some questions regarding mutual Funds – feel free to ask. Also, share this with your friends who are confused about choosing funds to save tax.
Download Best Tax Saving Mutual Fund Guide