Best ELSS To Invest In 2021

Its tax saving season and after tax changes have been announced in respect of ULIPs they are no longer attractive.

Different advantages of investing in Equity linked savings scheme

1. For tax savings, investment in ELSS is by far the most attractive as it has the shortest lock in of 3 years.
2. The instrument is able to fetch inflation beating return
3. Also, through exposure to equities, investors are able to create wealth in the long run.
4. Among all the tax-savings options, ELSS also fetch the highest return.
5. And now as the market outlook remains bullish, ELSS will continue to fetch higher returns

"Currently, equity markets have been rallying on account of global central banks driven liquidity. As long as this situation remains, markets will move higher and hence returns will be in positive territory. However, no one knows yet when global central banks could start raising interest rates which could be a trigger for market correction. But this seems to be an unlikely scenario in the near term," says Harish Bihani, Fund Manager - ELSS, ICICI Prudential Mutual Fund.

"The stocks market has reversed and rapidly gone up from its lows last year. The high returns that we see in equity schemes including ELSS funds are led by the market movement. Investors should not invest only on the basis of the last one-year return," says Saurabh Mittal, founder partner of a Mumbai-based wealth management firm, Circle Wealth Advisors. As a thumb-rule, ideally, we may expect returns around GDP plus inflation, Mittal adds.

So, to tap the equity space which is rising enormously in the current time and also take tax advantage, you may consider investment in some of the below mentioned ELSS funds. Also, for long term goals equities see volatility substantially reduced.

1. Axis Long Term Equity: This product is 8 years old and with an asset size of Rs. 27181 crore. The 4-star rated CRISIL fund has an expense ratio of 1.61 percent.

ELSS fund 1-year return 3-year return 5-year return
Axis Long Term Equity 27.37% 14.91% 17.81%

Portfolio comprises Bajaj Finance, TCS, HDFC Bank, Avenue Supermarts,Kotak Mahindra among others.

2. Kotak Tax Saver:

Another CRISIL 4-star rated fund has an AUM of Rs. 1539.5 crore. And as on March 2, 2021, NAV for the fund stood at 59.29. Expense ratio of the fund is 2.21%.

ELSS fund 1-year return 3-year return 5-year return
Kotak Tax Saver 31.17% 19.84% 13.19%

The fund's 95% portfolio is into equities with shares including Infosys, TCS, ICICI Bank, RIL, HUL, SRF among others.

3. Canara Robeco Equity Tax Saver:

This 5-star CRISIL rated fund has an asset size of Rs. 1538 crore and NAV last was seen at 96.15. Expense ratio was at 2.29%.

ELSS fund 1-year return 3-year return 5-year return
Canara Robeco Equity Tax Saver 38.62% 25.48% 17.65%