Tax Saving Investment in ELSS: It would not be wrong if Equity Linked Savings Scheme i.e. ELSS is called double benefit investment. This is because the top 5 tax saving ELSS funds of the country have given excellent returns to the investors along with giving them the opportunity to save income tax in the last 5 years. Be it one time investment or investment made through Systematic Investment Plan (SIP). The money of those who invested lump sum in these schemes has increased 3 to 4 times in 5 years, while the money invested through SIP has also almost doubled.
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Top 5 ELSS Tax Saver Funds
Here we are giving the details of those five ELSS Tax Saver Funds (Top 5 ELSS Tax Saver Funds), which have given the highest returns in the last 5 years. Along with the returns of the scheme, the figures of benchmark index and expense ratio are also given.
1. Quant ELSS Tax Saver Fund (Direct Plan)
5 Year Return on Lumpsum Investment (CAGR): 32.54%
Value of investment of Rs 1 lakh after 5 years: Rs 4,09,566
Total investment in 5 years through monthly SIP of Rs 10 thousand: Rs 6 lakh
Fund value after 5 years of SIP investment:Rs 11,80,713.4 (Annualized Return: 27.41%)
Benchmark: NIFTY 500 TRI (5 Year Return: 19.01%)
Asset Under Management (AUM): Rs 10,730.03 crore
Expense ratio: 0.59%
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2. Bank of India ELSS Tax Saver Fund (Direct Plan)
5 Year Return on Lumpsum Investment (CAGR): 25.87%
Benchmark: BSE 500 TRI (5 Year Return: 19.08%)
Value of investment of Rs 1 lakh after 5 years: Rs 3,16,351
Total investment in 5 years through monthly SIP of Rs 10 thousand: Rs 6 lakh
Fund value after 5 years of SIP investment: Rs 11,17,178 (Annualized return: 25.1%)
Asset Under Management (AUM): Rs 1,424.80 crore
Expense ratio: 0.84%
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3. Motilal Oswal ELSS Tax Saver Fund (Direct Plan)
5 Year Return on Lumpsum Investment (CAGR): 25.36%
Benchmark: NIFTY 500 TRI (5 Year Return: 19.01%)
Value of investment of Rs 1 lakh after 5 years: Rs 3,09,974
Total investment in 5 years through monthly SIP of Rs 10 thousand: Rs 6 lakh
Fund value after 5 years of SIP investment: Rs 13,18,668 (Annualized return: 32.08%)
Asset Under Management (AUM): Rs 4,342.36 crore
Expense Ratio: 0.65%
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4. SBI Long Term Equity Fund (Direct Plan)
5 Year Return on Lumpsum Investment (CAGR): 25.05%
Benchmark: BSE 500 TRI (5 Year Return: 19.08%)
Value of investment of Rs 1 lakh after 5 years: Rs 3,06,126
Total investment in 5 years through monthly SIP of Rs 10 thousand: Rs 6 lakh
Fund value after 5 years of SIP investment: Rs 12,02,031 (Annualized return: 28.16%)
Asset Under Management (AUM): Rs 27,777.32 crore
Expense ratio: 0.93%
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5. Parag Parikh ELSS Tax Saver Fund (Direct Plan)
5 Year Return on Lumpsum Investment (CAGR): 24.37%
Benchmark: NIFTY 500 TRI (5 Year Return: 19.01%)
Value of investment of Rs 1 lakh after 5 years: Rs 2,97,862
Total investment in 5 years through monthly SIP of Rs 10 thousand: Rs 6 lakh
Fund value after 5 years of SIP investment: Rs 10,83,719 (Annualized return: 23.83%)
Asset Under Management (AUM): Rs 4,514.98 crore
Expense ratio: 0.62%
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What is the specialty of ELSS funds?
Under SEBI rules, it is necessary to invest minimum 80% of the corpus of Equity Linked Saving Scheme in equity i.e. shares. The remaining 20% can be invested in other assets. The objective of ELSS is not only to save tax but also to give better returns to the investors in the long term. The lock in period for tax saving in the scheme is 3 years. But for long term wealth creation, it is better to invest for 5 years or more.
What is the tax benefit on investing in ELSS?
Tax benefits are available under Section 80C of the Income Tax Act on investment in ELSS up to a maximum of Rs 1.5 lakh in a financial year. Profits from selling units after the 3-year lock-in are considered long term capital gains (LTCG) and there is no tax on LTCG up to Rs 1.25 lakh in a financial year. If the profit is more than that, 12.5% LTCG tax is levied, which is a very beneficial deal for those falling in the income tax slab of 20 or 30 percent. That is why ELSS is considered very good in terms of tax saving. Its lock-in period of 3 years is also the lowest among all tax saving schemes.
Take investment decision considering the risk
The above figures show how good returns the top 5 ELSS funds have given in the last 5 years, but there is no guarantee that the past returns in a mutual fund will continue in the future. ELSS has a direct impact on stock market fluctuations. That is why they are given a rating of ‘Very High Risk’ on the Riskometer. Therefore, while deciding to invest in ELSS, you must keep your risk appetite in mind. By investing through SIP, market risk can be reduced in the long term. Still, market-related risk still remains.
(Disclaimer: The purpose of this article is only to provide information, not to recommend investment. Take any investment decision only after taking the opinion of a SEBI approved investment advisor.)
