SBI Mutual Fund Scheme : SBI Long Term Equity Fund : If you are thinking of investing for a long time and are ready to take risk for better returns, then SBI Mutual Fund scheme SBI Long Term Equity Fund can be a good option for you. This 21 year old mutual fund scheme of SBI was earlier known as SBI Magnum Taxgain Scheme. Coming under the category of Equity Linked Savings Scheme (ELSS), the regular plan of this equity mutual fund has increased the capital of its investors by two and a half times in the last 5 years and almost 40 times in 20 years.
Lump sum + SIP investment doubled in 5 years
Scheme: SBI Long Term Equity Fund (Regular Plan)
– Lump sum investment: Rs 1 lakh
– Monthly SIP: Rs 5,000
– Total investment (in 5 years): Rs 4,00,000
– Return in 5 years (annulized): 30.57%
– Current fund value after 5 years: Rs 10,14,996 (Rs 10.15 lakh)
Also read: ELSS vs Tax Saving FD: Which is better, how much return is getting in which, where to invest?
Lump sum investment increased 40 times in 20 years
Scheme: SBI Long Term Equity Fund (Regular Plan)
– Lump sum investment: Rs 1 lakh
– Investment period: 20 years
– Annualized Return (CAGR) in 20 years: 20.21%
– Fund value after 20 years: Rs 39,70,196 (Rs 39.7 lakh)
Also read: Mutual Fund: What if it is hybrid? Multi asset funds are not behind in giving high returns, generated huge income in 5 years
Tax benefits on investing in SBI Long Term Equity Fund
A major feature of SBI Long Term Equity Fund is that it provides tax exemption on investments up to Rs 1.5 lakh during a financial year. Through this exemption available under Section 80C of the Income Tax Act, investors falling in the highest tax slab can save a maximum tax of up to Rs 46,800 in a year. In this scheme, both lump sum investment and SIP start from as low as Rs 500. Since it comes under the category of tax saving ELSS, a lock-in of 3 years is applicable on the investments made in it.
Also read: NFO Alert: New fund offers of these fund houses including HDFC, LIC are open, opportunity to invest in everything from index funds to PSU bank ETFs.
Important points about SBI Long Term Equity Fund
– Scheme Name: SBI Long Term Equity Fund – Regular Plan
– Scheme Type: Open-ended Equity Linked Savings Scheme (ELSS) with a lock-in period of 3 years.
– Risk Level: Very High
– Scheme Objective: Long Term Capital Appreciation and Tax Saving
– Scheme start date: March 31, 1993
– Fund Manager: Dinesh Balachandran (since September 2016)
– Exit Load: Nothing
– Expense Ratio: 1.59% in Regular Plan and 0.93% in Direct Plan
Also read: Active vs Passive Mutual Funds: Which is better active or passive fund, where to invest? What is the correct answer to this question?
Major Holdings and Sector Allocation
– HDFC Bank: 4.47%
– GE T&D India : 3.7%
– Reliance Industries (RIL): 3.44%
– Mahindra and Mahindra (M&M): 3.42%
– ICICI Bank: 3.26%
– Cash and Cash Equivalents: 9.78%
Sector Allocation (% Investment)
– Financial Services: 23.86%
– Oil, Gas and Consumable Fuels: 10.99%
– Capital Goods: 9.65%
– Healthcare: 8.06%
– Information Technology: 7.68%
For whom is this scheme suitable?
SBI Long Term Equity Fund can be the right option for investors who want to invest for tax saving and long term capital growth. To get full benefit of investment in this scheme, preparation for long term investment should be done. Although the lock-in period in this scheme is only 3 years, but this scheme is not suitable for investors who want to invest for less than 5 years. Since it is a scheme with ‘very high’ risk level, you must assess your risk tolerance while investing in it. Also remember that investing through SIP helps in reducing the risk.
(Disclaimer: The purpose of this article is only to provide information and not to recommend investment in any scheme. The past returns of equity mutual funds cannot be considered as a guarantee of future performance. Any investment decision should be taken after getting complete information and Do this only after taking advice from your investment advisor.)
