As the financial year draws to a close, many tax-payers are searching for good ELSS (Equity Linked Savings Schemes) funds to invest in. ELSS funds are also called tax saving funds. The primary motive is to save tax under Section 80C and the long-term goal is to create wealth. Since tax-saving funds have a 3-year lock-in, it is important to choose the right scheme or be stuck for three years at least. Here are the top ELSS funds that can save you tax and create wealth too .
Top ELSS funds
|Most consistent funds||Mirae Asset Tax Saver, Invesco India Tax, Axis Long Term Equity and Franklin Tax Shield|
|SIP winner funds||Quant Tax, Canara Robeco Equity Tax Saver, BOI AXA Tax Advantage, Axis Long Term Equity and JM Tax Gain|
|Best rated funds||BOI AXA Tax Advantage, Canara Robeco Equity Tax Saver, Mirae Asset Tax Saver, Quant Tax, Axis Long Term Equity, ICICI Prudential Long Term Equity and DSP Tax Saver|
Looking at 1, 3-year ELSS fund winners at any point in time will throw up different names. That’s how the toppers chart works. Even a best fund that does well today, may suffer performance drop in future.
A better approach is to look at consistent performers who have always been in the best funds club in different years. Over the last 10 calendar years, there are some ELSS funds that have always stayed in the top segment of winners irrespective of the year. These consistent funds include Mirae Asset Tax Saver, Invesco India Tax, Axis Long Term Equity and Franklin Tax Shield.
For those investors who will do SIP in ELSS funds, it may be important to look at which funds have done well in SIP returns. Since ELSS comes with a 3-year lock-in, a 3-year SIP return will show the top picks.
Even in this case, we suggest that funds be chosen on their consistency. So, look at funds who have done well in 3 year SIP, 5 year SIP and 10 year SIP. Based on these yardsticks, the potential fund picks are Quant Tax, Canara Robeco Equity Tax Saver, BOI AXA Tax Advantage, Axis Long Term Equity and JM Tax Gain based on their consistent SIP track-records.
ELSS funds, just like other schemes, are rated by agencies like Value Research, Morningstar, CRISIL etc. Some media houses also publish their own ratings on funds. Many investors prefer investing in top-rated funds, arguing that the rating agency must have looked at all the factors before giving top rating.
In the ELSS fund space, the top-rated (5 stars) schemes by Value Research are BOI AXA Tax Advantage, Canara Robeco Equity Tax Saver, Mirae Asset Tax Saver and Quant Tax as on January 26, 2021. Ratings are subject to change.
Morningstar India ratings for ELSS funds give top (5 star and 4 star) ratings for 3 funds – Axis Long Term Equity, ICICI Prudential Long Term Equity and DSP Tax Saver. Ratings are subject to change.