Equity Linked Savings Schemes or ELSS as they are popularly known, help in saving tax under Sec 80C of the Income Tax Act. They are being increasingly preferred these days, especially among individuals who are looking to make returns from shares. So, in essence what they offer you is quick returns from equities along with tax benefits. These investments have a lock-in period of three years, which is the lowest lock-in among all tax saving instruments. Here is a look at some of the best ELSS schemes to invest in 2017.
Axis Long Term Equity
Axis Long term Equity is among the popular ELSS schemes in the country. It has sizeable assets under management of more than Rs 10,000 crores, which makes it among the most popular in the country. The returns have also been excellent along with a very low expense ratio, which are other big benefits. The net asset value of the fund is Rs 19.97 under the dividend plan, while the growth plan it is Rs 30.53.
Superb returns in 3 and 5 years
Axis Long Term Equity has given a three year returns of almost 21 per cent, while the 5 year returns have also been close to 21 per cent. This makes it amongst the best investment bets in the country. If you are a long term investor, you can continue to bet on Axis Long Term Equity. The portfolio of the fund is also very sound with stocks like Kotak Mahindra Bank and HDFC Bank, which makes this an excellent bet for the long term.
Birla Sun Life Tax Relief
This is another fund that has an excellent track record, when it comes to delivering returns. The fund has much lesser assets under management to the tune of Rs 2,358 crores. If you want to invest in the dividend scheme you need to do so at an NAV of Rs 22.64, while the NAV of the fund under the growth plan is Rs 127. One thing worth mentioning about the fund is that it is heavily skewed in favour of smaller size companies.
For example, the largest holding of the fund is in Sundaram Clayton and Bayer Crop Sciences.
Excellent track record of returns
Birla Sun Life Tax Relief has had an excellent track record when it comes to returns. For example, the fund has generated returns of near 21 per cent in 3 years. The 5 year returns has been around 20 per cent. As compared to Axis Equity the fund has a higher expense ratio of 2.25 per cent. One thing that we need to mention is that the portfolio can be volatile given the huge presence in smaller sized companies as compared to the large cap stocks.
Reliance Tax Saver Fund
When one compares returns for the last three years, this has to be one fund that has generated the best possible returns from the ELSS pack. In fact, the
fund has generated returns of almost 23 per cent in the last three years, making it the best ELSS to invest in 2017. In fact, the fund has a good portfolio mix of large cap and mid cap stocks. For example, the largest holding in the fund is TVS Motors, while the second largest is State Bank of India.
As mentioned earlier, the stock has generated good returns in the last few years. The three year returns has been 23 per cent, while the 5 year returns has has been 22 per cent. So, the long term holding returns from the fund has been pretty good. One thing we need to mention in the case of all investments is that these are equity linked savings scheme and returns are largely linked to the stock market. So, there is always a big element of risk in the same.
Always an element of risk
It is important to remember that ELSS schemes always bring in an element of risk. While we have endeavoured to offer you the best possible options, when it comes to ELSS, there is no guarantee that the ones listed above will churn out excellent returns in the future as well.
The article is not a solicitation to buy, sell in securities or other financial instruments. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author do not accept culpability for losses and/or damages arising based on information in this article. The author and his family do not own any units in the above mentioned mutual funds.