Double Return on SIP in ELSS: The name of Equity Linked Savings Scheme i.e. ELSS is often taken in connection with tax saving. But this scheme of mutual fund does not only save tax. Top funds falling in this category have also given excellent returns to investors during the last 5 years. Those who have invested in the top 5 ELSS funds through Systematic Investment Plan (SIP), their money has almost doubled in the last 5 years. If you add tax saving to this double return on investment, then their benefits will increase even more. You can see important information about these top 5 ELSS funds here.
ELSS funds giving best returns on SIP in 5 years
Here we are giving information about those ELSS funds, whose direct plans have almost doubled or more the money of those investing through SIP in the last 5 years. You can also see the CRISIL Rating and expense ratio of these schemes here.
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1. Motilal Oswal ELSS Tax Saver Fund (Direct Plan)
Monthly SIP: Rs 10 thousand
Total investment in 5 years through SIP: Rs 6 lakh
Fund value after 5 years: Rs 13,64,937
Annualized return on SIP in 5 years: 33.56%
Expense ratio: 0.65%
CRISIL Rating: 5 Star
2. SBI Long Term Equity Fund (Direct Plan)
Monthly SIP: Rs 10 thousand
Total investment in 5 years through SIP: Rs 6 lakh
Fund value after 5 years: Rs 12,26,918
Annulized return on SIP in 5 years: 29.05%
Expense ratio: 0.93%
CRISIL Rating: 5 Star
3. Quant ELSS Tax Saver Fund (Direct Plan)
Monthly SIP: Rs 10 thousand
Total investment in 5 years through SIP: Rs 6 lakh
Fund value after 5 years: Rs 12,11,037 Rs.
Annulized return on SIP in 5 years: 28.49%
Expense ratio: 0.59%
CRISIL Rating: 3 Star
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4. Bank of India ELSS Tax Saver Fund (Direct Plan)
Monthly SIP: Rs 10 thousand
Total investment in 5 years through SIP: Rs 6 lakh
Fund value after 5 years: Rs 11,78,368
Annualized return on SIP in 5 years: 27.34%
Expense ratio: 0.84%
CRISIL Rating: 3 Star
5. HDFC ELSS Tax Saver Fund (Direct Plan)
Monthly SIP: Rs 10 thousand
Total investment in 5 years through SIP: Rs 6 lakh
Fund value after 5 years: Rs 11,52,998
Annualized return on SIP in 5 years: 26.43%
Expense ratio: 1.09%
CRISIL Rating: 4 Star
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Don’t decide just by looking at returns
You must have understood by looking at the above figures how good returns the top 5 ELSS funds have given in the last 5 years, but it would not be right to invest in this scheme just by looking at the returns. Before taking any decision, it is important to have thorough information about the scheme.
ELSS fund allocation
It is necessary to invest at least 80% of the corpus of any Equity Linked Saving Scheme in stocks. Under SEBI rules, the remaining 20% can be invested in other assets. In the investment strategy of ELSS, along with tax saving, special emphasis is also given on earning long term profits on equity investments. Although the lock in period for tax saving in this scheme is only 3 years, but for wealth creation it is considered better to maintain the investment for 5 years or more.
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Tax benefit of investing in ELSS
Tax benefits are available on investments made in ELSS under Section 80C of the Income Tax Act. This tax exemption is available on investments up to a maximum of Rs 1.5 lakh during a financial year. If you sell units of ELSS fund after the lock-in of 3 years, then the profit arising from it is considered as Long Term Capital Gain (LTCG), which is tax exempt. There is no LTCG tax to be paid if the profit is up to Rs 1.25 lakh during a financial year. If the profit is more than this, LTCG tax is levied at the rate of 12.5%, which is lower than the tax slab of 20 or 30 percent. This is the reason why ELSS is considered a very good scheme in terms of tax savings. Not only this, the 3 year lock-in period of ELSS is also the lowest among all tax saving schemes.
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decision based on risk do
Since 80% of ELSS corpus is invested in shares, these funds are directly affected by market fluctuations. That is why they are considered ‘Very High Risk’. Investing through SIP reduces market risk in the long term, but does not eliminate it. Therefore, while deciding to invest money in ELSS, you must keep your risk appetite in mind.
(Disclaimer: The purpose of this article is only to provide information about the scheme and not to recommend investment. The past returns of a mutual fund cannot be considered as a guarantee of future performance. Any investment decision is based on the opinion of a SEBI approved investment advisor. Do this only after taking.)