Income Tax Saving Investment: Quant ELSS Tax Saver Fund:If you believe in regular savings and long-term investments, then mutual funds can be a great option for you. Especially tax saving mutual funds, which not only give you good returns but also provide tax exemption. One such tax saving investment option is Quant ELSS Tax Saver Fund.You can guess the great returns of this fund from the fact that if someone had made a small investment of Rs 25,000 at the time of launch and also invested only Rs 2500 every month in this scheme, then he would have accumulated Rs 1 crore by now. If you want, you can consider the tax benefit on investment in this scheme as a ‘bonus’ along with huge profits.
What is special about Quant ELSS Tax Saver Fund?
Quant ELSS Tax Saver Fund was launched on 1 April 2000, i.e. this fund is now more than 24 years old. You can start investing in this fund with a minimum SIP of Rs 500 and its lock-in period is 3 years. It is an open-ended equity-linked savings scheme (ELSS), which invests at least 80% in equity shares.
Also read: Mutual Fund: Mutual Fund that can turn 3 lakhs into 12 lakhs in 5 years! Should you invest?
How did you accumulate Rs 1 crore with a SIP of Rs 2500?
If you had invested Rs 25,000 in lump sum in Quant ELSS Tax Saver Fund 24 years ago and continued monthly SIP of Rs 2500, then today this investment would have become more than Rs 1 crore. You can see its calculation here:
- Lumpsum investment 24 years ago: Rs 25,000
- Annual return on lump sum investment over 24 years: 16.31%
- Monthly SIP for 24 years: Rs 2500
- Annualized return on SIP investment in 24 years: 17.71%
- Total investment (Lumpsum + SIP) in 24 years: Rs 7,45,000
- Total Fund Value after 24 years (Lumpsum + SIP): Rs 1,00,88,654 (around Rs 1 crore)
Also read: Top 10 Index Funds: This is how money rained on investors! Top 10 index funds gave up to 77% return in one year
Portfolio and Investment Strategy
Quant ELSS Tax Saver Fund is an equity linked savings scheme, so it is necessary to invest at least 80% in equity shares. Currently, 95.02% of this scheme is invested in equity and 4.98% in cash and cash-like instruments. In terms of market cap, 91.4% of the equity investment of this fund is invested in large caps, 7.77% in mid caps and 0.84% in small caps. The investment strategy of this fund aims to focus on capital growth. It is clear from the scheme’s portfolio that most of it is invested in shares of large cap companies, which are considered to give stronger and stable returns.
Also read: Mutual Fund: Quant Small Cap Fund made Rs 1 lakh into Rs 7.38 lakh in 5 years, gave more than 3 times return on SIP
Tax benefits and risks
By investing in Quant ELSS Tax Saver Fund, you also get tax exemption under Section 80C of the Income Tax Act. According to this section, tax exemption can be availed on investment up to Rs 1.5 lakh during a financial year. Also, if you sell your units after the lock-in period of 3 years is over, then no tax has to be paid on profit up to Rs 1.25 lakh during a financial year. Whereas on profit more than this, 12.5 percent Long Term Capital Gains (LTCG) tax is levied.
According to the ‘Riskometer’, which estimates the risk, AMFI has placed this scheme in the ‘very high’ risk category. However, it has also received a five-star rating on all grounds including consistently better returns and quality of investment. The benchmark of this scheme is the Nifty 500 Total Return Index (NIFTY 500 TRI).
Also read: ICICI Prudential’s 21 year old ETF shines, makes people who invested Rs 4 lakh millionaires
For whom is this scheme right
Quant ELSS Tax Saver Fund is a better option for those who are willing to make long term investments in the market for wealth creation and also want to save income tax. By investing regularly and for a long time in the scheme, you can achieve your financial goals. But being a scheme that invests primarily in equity, investors should be prepared for market fluctuations. This fund has a lock-in period of 3 years due to tax benefits, but it is considered better to invest in equity funds for a period of at least 5-7 years for better returns.
(Disclaimer: Investment in mutual funds is directly affected by the fluctuations in the stock market. Past return figures do not guarantee the same returns in the future. Our aim is not to advise investing in any fund, but only to provide information. Take any investment decision only after consulting your investment advisor.)
