Which are Best ELSS Tax Saving Mutual funds for 2018-2019? Which ELSS Mutual Fund is likely to give a better return in 2018? Well, before answering these question let’s try to understand the concept of ELSS. ELSS is tax saving mutual fund. The full form of ELSS is equity linked saving scheme. One can claim deduction under 80C up to 1.5 Lakh for the amount invested in ELSS. Any extra amount beyond 1.5 Lakh does not qualify for 80 C exemption. ELSS is the best tax saving option. After understanding concept of ELSS let’s take a quick look at ELSS benefits, features and try to analyze and identify the Best ELSS Tax saving Mutual funds for investment.
Features of ELSS funds
- ELSS is diversified equity mutual funds available for tax saving purpose. ELSS invest a majority of a corpus in the Equity market.
- ELSS funds have both dividend and growth options.
- This type of fund has a lock-in period of 3 years from the date of purchase.
- You can start SIP (Systematic Investment Planning) in ELSS with a minimum investment of 500 Rs.
Benefits of Investing in ELSS Mutual Funds
- ELSS investment serves two purposes (1) Tax saving (2) Wealth generation.
- Tax Deduction of 1.5 Lakh can be claimed under Section 80 C of Income-tax by investing in ELSS.
- ELSS comes with Lock in a period of 3 years. This lock-in period is lowest compared to other tax saving options like tax saving fixed deposit and PPF.
- Expected return in ELSS is higher compared to other tax saving instruments PPF or Tax Saving FD.
- ELSS funds fall under the EEE (exempt-exempt-exempt) category same as that of PPF and Sukanya Samriddhi Account. Under this funds investment amount get a tax deduction, withdrawal amount is tax-free and no tax will be charged for capital gain also.
- Dividend obtained from ELSS funds are also tax-free.
- ELSS fund also offers SIP investment option, which brings discipline in regular investing.
- ELSS is the best tax saving instrument in terms of expected return, lock-in period and periodicity of investment.
From above you can clearly say that ELSS fund is the best tax saving option.
Drawbacks of investing in ELSS Mutual Fund
- ELSS invests money in the equity market only. This makes ELSS risky investment option.
- The return offered by ELSS fund is variable in nature. In case of a stock market crash, you may end up earning a negative return.
- Lock-in period for ELSS is 3 years. This means you have to wait for minimum 3 years.
After understanding the features and benefits and drawbacks of this fund let us take a look at Best ELSS fund for investment in 2018-2019.
Best ELSS Tax Saving Mutual Funds for Investment in 2018 – 2019
Best ELSS Tax Saving Mutual Funds for Investment in 2018-2019 is selected based on following key parameters.
- Performance – The first parameters for the selection of Best ELSS Tax saving mutual fund is the performance of the fund. The consistent performer fund since last 5 years is taken into account.
- Fund Rating – The second factor for the consideration is Fund Rating. The fund should be with high ranking/rating by VRO (value research online) and CRISIL.
- AUM – The Asset under management is also taken into account while selecting best ELSS for investment. Higher AUM means higher the confidence of investor to that fund.
- Expense Ratio – Expense ratio is also important while selecting a mutual fund for investment. Expense ratio should be lower. The Best ELSS funds given below are with low expense ratio.
Reliance Tax Saver Fund
Performance – Reliance Tax saver is one of the best ELSS Funds. Reliance Tax saver has generated 17% return since launch. If we look at last year performance this fund has generated 45% return. In last 5 years, this fund was able to generate 23% return for the investor. Rs. 1 Lakh invested in 2005, has grown to 6.5 lakh now by investing in Reliance Tax saver ELSS.
Reason to Invest – Reliance Tax Saver fund has generated very good annualized return over last few years. AUM of this fund is high this indicates it is choice of investment by many investors. CRISIL and Value Research Online ranking of this fund is good. Lower expense ratio and experience fund manager make this fund lucrative option for investment. Overall Reliance Tax Saver is Best ELSS fund for Investment in 2018-2019.
Axis Long Term Equity Fund
Performance – Axis Long Term Equity Fund is second Best ELSS fund for investment in 2018-2019. Axis Long Term Equity fund has generated 19% return since launch. In last 5 years, this mutual fund has generated 22% annualized return for the investor. Last year this fund has generated 37% return.
Reason to Invest – AUM of this fund is very high which is very good sign. The past performance of this fund is very good. Value Research rating of this fund is 4. The expense ratio of this fund is low.
DSP Black Rock Tax Saver Fund
Performance – DSP Black Rock Tax Saver is third ELSS fund for investment in 2018. DSP Black Rock Tax Saver fund generated 36% return last year. This fund has generated 15.6% return since launch.
Reason to Invest – The historical performance of DSP Black Rock Fund is very good. The Value Research Rating of this fund is 4 which is very good.
IDFC Tax Advantage ELSS
Performance – IDFC Tax Advantage ELSS was top performer fund in ELSS last year. IDFC Tax Advantage fund generated 54% return last year. This means if you have invested Rs.1 Lakh in this fund last year your investment would have grown to 1.54 Lakh by now. This fund has given 22.11% return since launch.
Reason to Invest – The performance of this fund is extremely well. The CRISIL ranking of this fund is 5 and VRO rating is 4. This fund is able to beat benchmark return every year.
Tata Tax Saving Fund
Performance – Tata Tax Saving fund is last Best ELSS for investment in 2018. Tata India Tax Saving Fund has generated a consistent return for the investor in past. Last one year return of this fund is 45%. In last 5 years, this fund was able to generate 22% return for the investor.
Reason to Invest – The performance of this fund is very good. This fund is rated with 5 ranking by both Value Research and CRISIL.
Summary of Best ELSS Tax Saving Mutual Fund for Investment in 2018-2019
Point to remember while investing in ELSS funds
- SIP Investment mode is advisable over lump sum to take advantage of cost averaging.
- Select Growth option over dividend for wealth generation.
- It is a good idea to invest in Direct Plan to save cost and generate higher returns.
- Its good idea to stay invested in ELSS beyond lock-in period of 3 years for long-term wealth creation.
- Along with ELSS fund, you should also invest your money in other equity mutual funds. Maximum ELSS advisable per portfolio is 2 or 3.
Also Read – 20 Best Mutual Funds for Investment
Over to You –
Do you invest in ELSS Mutual funds for tax saving? Do you think ELSS fund mentioned above are best for investment?
Do share your queries and comments.
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