3 Best Mutual Fund SIPs In ELSS (Tax-Savings) Category, 4 Star Rated By Value Research

 

Tax-savings (ELSS) mutual fund SIPs

Mutual funds will invest in multiple company stocks that have moved the graph considerably well in the past years and will fetch returns depending on their performances. In the case of ELSS funds, there will be a minimum 3 years lock-in period, which means, you should keep your money in these funds for at least 3 years. However, you can hold your position in the same funds, beyond this period. The ELSS funds are generally opted by investors, who come under the government's tax slabs, in order to save the tax. Under Section 80C of the Indian income tax laws, you can investment of up to Rs. 1.5 lakh in a financial year, to save tax.

About the taxation, if you sell the fund after 1 year gains of up to Rs. 1 lakh in an FY are exempt from tax, and gains over Rs. 1 lakh will be taxed at the rate of 10%. on the other hand, if you sell the fund within 1 year, the entire amount of gain will be taxed at the rate of 15%. But you will not have to pay any tax if you continue your position in the fund.

Here are 3 ELSS mutual funds (direct plan) that have been mentioned, those were rated by Value Research based on their performances.

1. DSP Tax Saver Fund - Direct Plan

DSP Tax Saver Fund's assets are Rs. 9,420 Crore (As on November 30, 2021), and the expense ratio is 0.84%. The minimum SIP investment for this fund is Rs. 500, with no exit load. The DSP Tax Saver Fund has been rated with 4 star by the reputed research firm Value Research.

This fund's trailing returns in the last 1 year stood at 35.93%, in the 3 years it stood at 23.87%, in the last 5 years it stood at 19.01%, and in the last 7 years it stood at 16.36%. As the ELSS funds have a 3 years lock-in period, as an investor you should check the past 3 years returns and compare them with the peer funds. In the last 3 years, Rs. 1 lakh investment in this fund has grown to Rs. 1.90 lakh, while an investment of Rs. 10000 in monthly SIP has grown to Rs. 5.60 lakh. The best performing year for this fund was from March 23, 2020 to March 23, 2021, with a 97.86% return.

The top 5 holdings of this fund are, ICICI Bank, HDFC Bank, Infosys Technology, Axis Bank, and the State Bank of India. DSP Tax Saver Fund's top holding are in the financial sector followed by the technology and construction sectors. Among total allocation, this fund invests 98.5% in equities and 1.6% in the cash and cash equivalent sector. In its portfolio, the DSP Tax Saver Fund invests 47.23% in giant-cap companies (considering market capitalization), 17.22% in the large-cap companies, 29.25% in the mid-size companies, and 6.31% in the small-cap companies.

2. Axis Long Term Equity Fund - Direct Plan

Axis Long Term Equity Fund's assets are Rs. 33,529 Crore (As on November 30, 2021), and the expense ratio is 0.74%. The minimum SIP investment for this fund is Rs. 500, with no exit load. The Axis Long Term Equity Fund has been rated with 4 star by reputed research firm Value Research. According to the research firm, this fund's Return Grade is Above Average than other funds in the same category.

This fund's trailing returns in the last 1 year stood at 26.76%, in the 3 years it stood at 22.53%, in the last 5 years it stood at 21.08%, and in the last 7 years it stood at 16.14%. In the last 3 years, Rs. 1 lakh investment in this fund has grown to Rs. 1.84 lakh, while an investment of Rs. 10000 in monthly SIP has grown to Rs. 5.41 lakh. The best performing year for this fund was from September 3, 2013 to September 3, 2014, with an 89.19% return.

The top 5 holdings of this fund are, Avenue Supermarts, Bajaj Finance, Tata Consultancy Services, Info Edge (India), and Kotak Mahindra Bank. Axis Long Term Equity Fund's top holding are in the financial sector followed by the services and technology sectors. Among total allocation, this fund invests 98.8% in equities and 1.1% in debts. In its portfolio, the DSP Tax Saver Fund invests 53.42% in giant-cap companies (considering market capitalization), 26.06% in large-cap companies, 18.68% in mid-size companies, and 1.83% in the small-cap companies.

3. UTI Long Term Equity Fund - Direct Plan

The UTI Long Term Equity Fund's assets are Rs. 2,977 Crore (As on November 30, 2021), and the expense ratio is 1.13%. The minimum SIP investment for this fund is Rs. 500, with no exit load. The UTI Long Term Equity Fund has also been rated with 4 star by Value Research.

This fund's trailing returns in the last 1 year stood at 34.00%, in the 3 years it stood at 23.05%, in the last 5 years it stood at 18.21%, and in the last 7 years it stood at 14.48%. In the last 3 years, Rs. 1 lakh investment in this fund has grown to Rs. 1.86 lakh, while an investment of Rs. 10000 in monthly SIP has grown to Rs. 5.65 lakh. Best performing year for this fund was from March 23, 2020 to March 23, 2021, with a 92.83% return.

The top 5 holdings of this fund are Infosys Technology, HDFC Bank, ICICI Bank, Bharti Airtel, and Axis Bank. UTI Long Term Equity Fund's top holding are in the financial sector followed by the technology and services. Among total allocation, this fund invests 98.8% in equities and 1.2% in the cash and cash equivalent sector. In its portfolio, the UTI Long Term Equity Fund invests 41.65% in giant-cap companies (considering market capitalization), 18.89% in large-cap companies, 30.66% in mid-size companies, and 8.81% in the small-cap companies.

Performance comparison

All of those 3 ELSS funds have been rated 4 star by the mentioned research firm. However, considering the asset size, the Axis Long Term Equity Fund stays at the top, with Rs. 33,529 Crore market capital. Hence, this fund poses additional security for the investors in terms of liquidity. On the other hand, the DSP Tax Saver Fund will stay at the top with 23.87% returns in the last 3 years. ELSS funds have a lock-in period of 3 years, so the returns of that particular period are important. If you are thinking of the minimum investment lock-in period, then this fund's portfolio can be checked.

However, all of these funds are under reputed mutual fund houses and have performed well in the past years, providing security to the investors.

(Also read: 3 Best SIPs With 5 Star Rating, Those Invest In Large Caps)

Disclaimer

Investing in equities/mutual funds poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies and the author are not liable for any losses caused as a result of decisions based on the article.

(Data taken from research firm Value Research)

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