“Our analysis shows that ELSS gave 26% and 22% annualised returns over three and 10 years respectively vis-à-vis 8-9% offered by traditional tax saving investment products such as Public Provident Fund (PPF) and National Savings Certificate (NSC),” the rating agency has stated in a release.
CRISIL Research has analysed the performance of ELSS funds and compared their returns to the benchmark S&P CNX 500 index as well as returns from traditional products like the PPF and the NSC. While traditional debt oriented products are relatively safer and more stable, they do not generate higher inflation-adjusted returns over the long run.
According to Mukesh Agarwal, Senior Director – CRISIL Research, “ELSS is not only an attractive option to save tax, but also helps create wealth over the long run. ELSS as a category has outperformed the benchmark S&P CNX 500 index across three and 10 years. With average inflation around 7% over the past three years, top CRISIL-ranked ELSS gave an inflation adjusted return of 14%, which is significantly higher than returns offered by other tax saving products.”