Combining tax benefits with higher returns: Tax-saving funds that top the charts
Equity-Linked Saving Schemes (ELSS) or tax-saving equity funds are the only pure equity instrument in the basket of instruments eligible for Section 80C tax deduction benefits
Equity linked saving scheme (ELSS)- popularly referred to as tax saving schemes- is the only pure equity-linked investment in the crowded Section 80C tax deduction basket. Investments in ELSS are locked-in for three years. ELSS is often better-placed if the investor is keen on capital appreciation in the long term. High returns draw many investors to ELSS. Over last five years the best performing ELSS scheme has given 22.75 percent whereas the worst performing one gave 4.78 percent returns. The gap highlights the need to choose consistent performers. Moneycontrol looked at the SIP performance to shortlist the better performing ELSS. We compiled the 5-year SIP rolling returns over the last 10-year period to check for consistency. Only schemes with a corpus of at least Rs 500 crore and 10 years’ worth of track record were considered. Remember, though, that past performance does not guarantee future performance. Data source: ACEMF.
2/9
Quant Tax Plan Earlier called Escorts Tax Plan, the scheme offers a diversified equity portfolio spread across shares of companies of large, mid and small sizes by market capitalization. The scheme is managed by Ankit Pande and Vasav Sahgal and managed top of the chart performance. The scheme has the highest expense ratio of 2.62 percent among ELSS schemes.
3/9
Bank of India Tax Advantage Fund The scheme has the smallest assets under management of Rs 676 crore, among the schemes in the list of consistent performers shortlisted for this story. The scheme is managed by Alok Singh, CIO, Bank of India AMC, who took over the fund management responsibility in April 2022.
4/9
Axis Long Term Equity Fund With its assets under management worth Rs 31,624 crore, this is the largest scheme among ELSS schemes in the mutual fund industry. Jinesh Gopani is the fund manager of the scheme. He has the distinction of managing this scheme for the longest tenure (almost 10 years) if compared to the extant fund managers of ELSS schemes. The scheme’s performance has been suffering since CY2021, as the quality focused portfolios underperformed the broad markets.
5/9
Canara Robeco Equity Tax Saver Fund The scheme is managed by Shridatta Bhandwaldar and Vishal Mishra. The portfolio of the scheme is tilted towards large cap stocks and relatively large sized mid-cap stocks. Bhadwaldar is known for owning good quality compounding businesses and alpha generators – which include companies that may see better fortunes in medium terms. The scheme also appeared in the MC30 list.
6/9
DSP Tax Saver Fund Rohit Singhania and Kaushal Maroo manage this scheme. The fund manager is value conscious and focuses on margin of safety while picking stocks. The portfolio also houses some names that may not strictly adhere to margin of safety criterion, and instead scores high on strong growth and profitability matrix.
7/9
IDFC Tax Advantage (ELSS) Fund Daylynn Pinto has been managing this scheme since October 2016 with growth at attractive price as his investment philosophy. The scheme has been allocating more to mid and small cap companies compared the ELSS category average. This has resulted in bouts of underperformance against the category average as mid and small cap stocks have been a volatile lot.
8/9
Invesco India Tax Plan The scheme is managed by Dhimant Kothari and Amit Nigam. The scheme has assets under management of Rs 1916 crore and has managed to generate 13.56 percent returns on an average for five year SIP.
9/9
Kotak Tax Saver Fund The scheme with assets under management of Rs 3,063 crore is managed by Harsh Upadhyay since August 2015. The portfolio of the scheme is diversified across companies of all sizes. The scheme appeared on the MC30 list – a curated basket of schemes for investors looking for long term returns
