The main purpose of investing for most investors is tax saving. Equity linked saving schemes (ELSS) are those mutual fund schemes that help you save taxes as well as generate decent returns. But, how do you separate the wheat from the chaff? Here is a list of few ELSS schemes that you should consider for investing.
The main purpose of investing for most investors is tax saving. Equity linked saving schemes (ELSS) are those mutual fund schemes that help you save taxes as well as generate decent returns. But, how do you separate the wheat from the chaff? Here is a list of few ELSS schemes that you should consider for investing.
The true measure of ELSS scheme’s worth is consistency. Following four ELSS schemes make the cut based on their 5 years, 3 years and 1 year performance put together (see tables). These schemes have remained in the Top 10 ELSS schemes for all these durations :
- Canara Robeco Equity Tax Saver
- HDFC Taxsaver
- Sahara Tax Gain
- Birla Sun Life Tax Relief 96
Investment in ELSS schemes qualify for deductions under section 80C. So, you could max your returns by investing the entire Rs 1 lakh limit of your Section 80C deductions through ELSS investments alone. However, be cautious as ELSS schemes have a risk grade higher than other investments that qualify under section 80C such as life insurance, PPF, NSC, etc.
Another important factor to consider is the lock-in period. ELSS schemes have a 3 year lock-in, that means you can not sell the investment before this period.
Top 10 Tax Saving Mutual Funds (ELSS)
The following 3 tables lists the Top 10 ELSS Schemes in descending order of their 5 years, 3 years and 1 year returns. This may help you in selecting the best ELSS scheme for your needs.
ELSS Schemes Ranking based on 5 Year Returns
|
Rank |
Fund Name |
Return (%) |
NAV for Plan |
NAV as on Date |
|||
|
1 Year |
3 Year |
5 Year |
Dividend |
Growth |
|||
|
1 |
Magnum Taxgain |
93.29 |
10.05 |
32.03 |
44.4 |
59.05 |
11-Jan-2010 |
|
2 |
Canara Robeco Equity Tax Saver |
97.08 |
19.21 |
28.82 |
20.29 |
22.28 |
11-Jan-2010 |
|
3 |
Sundaram BNP Paribas Taxsaver |
81.83 |
15.64 |
28.04 |
15.03 |
43.92 |
11-Jan-2010 |
|
4 |
HDFC Taxsaver |
106.03 |
11.2 |
27.09 |
62.36 |
200.48 |
11-Jan-2010 |
|
5 |
Sahara Tax Gain |
96.88 |
16.63 |
25.99 |
18.99 |
33.33 |
11-Jan-2010 |
|
6 |
ICICI Prudential Tax Plan |
120.85 |
9.38 |
24.52 |
18.51 |
124.12 |
11-Jan-2010 |
|
7 |
Franklin India Taxshield |
86.18 |
13.3 |
23.67 |
32.85 |
181.84 |
11-Jan-2010 |
|
8 |
Birla Sun Life Tax Relief 96 |
111.64 |
10.74 |
22.39 |
88.66 |
10.99 |
11-Jan-2010 |
|
9 |
Franklin India Index Tax |
79.82 |
9.33 |
21.39 |
40.2 |
n/a |
11-Jan-2010 |
|
10 |
Principal Personal Tax Saver |
93.44 |
9.76 |
21.22 |
91.44 |
n/a |
11-Jan-2010 |
ELSS Schemes Ranking based on 3 Year Returns
|
Rank |
Fund Name |
Return (%) |
NAV for Plan |
NAV as on Date |
|||
|
1 Year |
3 Year |
5 Year |
Dividend |
Growth |
|||
|
1 |
Taurus Tax Shield |
106.56 |
22.69 |
18.84 |
23.93 |
32.76 |
11-Jan-2010 |
|
2 |
Canara Robeco Equity Tax Saver |
97.08 |
19.21 |
28.82 |
20.29 |
22.28 |
11-Jan-2010 |
|
3 |
Sahara Tax Gain |
96.88 |
16.63 |
25.99 |
18.99 |
33.33 |
11-Jan-2010 |
|
4 |
Sundaram BNP Paribas Taxsaver |
81.83 |
15.64 |
28.04 |
15.03 |
43.92 |
11-Jan-2010 |
|
5 |
Religare Tax Plan |
91.49 |
15.54 |
n/a |
12.86 |
15.53 |
11-Jan-2010 |
|
6 |
Fidelity Tax Advantage |
91.58 |
14.11 |
n/a |
16.61 |
18.5 |
11-Jan-2010 |
|
7 |
Franklin India Taxshield |
86.18 |
13.3 |
23.67 |
32.85 |
181.84 |
11-Jan-2010 |
|
8 |
HDFC Taxsaver |
106.03 |
11.2 |
27.09 |
62.36 |
200.48 |
11-Jan-2010 |
|
9 |
Birla Sun Life Tax Relief 96 |
111.64 |
10.74 |
22.39 |
88.66 |
10.99 |
11-Jan-2010 |
|
10 |
Magnum Taxgain |
93.29 |
10.05 |
32.03 |
44.4 |
59.05 |
11-Jan-2010 |
ELSS Schemes Ranking based on 1 Year Returns
|
Rank |
Fund Name |
Return (%) |
NAV for Plan |
NAV as on Date |
|||
|
1 Year |
3 Year |
5 Year |
Dividend |
Growth |
|||
|
1 |
ICICI Prudential Tax Plan |
120.85 |
9.38 |
24.52 |
18.51 |
124.12 |
11-Jan-2010 |
|
2 |
Birla Sun Life Tax Relief 96 |
111.64 |
10.74 |
22.39 |
88.66 |
10.99 |
11-Jan-2010 |
|
3 |
ING Tax Savings |
107.18 |
-0.97 |
17.56 |
13.09 |
26.54 |
11-Jan-2010 |
|
4 |
DBS Chola Tax Saver |
106.86 |
3.63 |
n/a |
14.28 |
15.37 |
11-Jan-2010 |
|
5 |
Taurus Tax Shield |
106.56 |
22.69 |
18.84 |
23.93 |
32.76 |
11-Jan-2010 |
|
6 |
HDFC Taxsaver |
106.03 |
11.2 |
27.09 |
62.36 |
200.48 |
11-Jan-2010 |
|
7 |
Canara Robeco Equity Tax Saver |
97.08 |
19.21 |
28.82 |
20.29 |
22.28 |
11-Jan-2010 |
|
8 |
Sahara Tax Gain |
96.88 |
16.63 |
25.99 |
18.99 |
33.33 |
11-Jan-2010 |
|
9 |
DSPBR Tax Saver |
95.48 |
n/a |
n/a |
11.46 |
15.4 |
11-Jan-2010 |
|
10 |
HDFC LT Advantage |
93.77 |
8.01 |
20.66 |
38.26 |
117.3 |
11-Jan-2010 |
Sign up for our email updates
RSS Feeds 
Follow @personalmoneyin
Join Personal Money Group
Become a Fan on Facebook
Good Informative Article.
Thanks Jitender!
Thanks really needed some of this advice.
You are Welcome Anshu! We are glad that this article was helpful to you.
Remember there is no shortage of crooks in the world — there are millions of people out there ready to strip you of your money. However you can help by not making it easy for them. If you're careless then you're sitting duck for these scamsters so remember you will get shot!
Hi shwetamisra,
I am srinivas from hyderabad. I need some clarification on mutual fund specially on close-ended mutual fund. My doubt is if i have inveseted in MF through SIP for 3 years locking period for that when will i get my money back? after 3 year of completing my locking period or i need to wait more 3 year to get back my money. Ex i have started investing monthly from 01/04/2007 – 01/02/2010 (3 years when will i get back my money for this investement. kinldy adivise in this.
Regards
Srinivas
Thanks Srinivas!
this is a very interesting question, in ELSS SIP, every investment is treated as a fresh investment and has a lock-in of 3 years. So if you have invested monthly for a period of 01/04/2007 to 01/02/2010 then you can start withdrawing after 01/04/2010 and can withdraw upto a maximum of units allotted to you three years back i.e. on 01/04/2007. Full withdrawal is possible only after 01/02/2013.
hope this answers your question.
Hey Shweta,
I saw the performance of a few ELSS schemes u mentioned in the post above.. Any idea how Bajaj Allianz is performing?
Hi Harpreet,
Thanks for your query, Bajaj Allianz do not offer Mutual Funds, so they are not covered in this compilation of Top 10 ELSS schemes. Bajaj Allianz is a Life Insurance and offer ULIP schemes. In terms of unit performance Bajaj Allianz's ULIP is one of the best performing ULIPs.
Hi Shweta.. I am a newbie investor so dont have much idea about the pros n cons of the investment schemes. I have been insvesting in the Bajaj Allianz ULIPs since last 2 years. How can I come to know what is the current value of my investment at this point of time?
Click here http://goodfundsadvisor.blogspot.com/2010/03/best... and get advise from India’s BEST Investment Advisor on ELSS
@shrikanth
Thanks for sharing the link. It will certainly help our readers. Please also share your views about our articles and posts.
You have posted an excellent article. However, it would have been better if you had given your personal favorites with reasons behind it.
We did provided details and reasons for our personal favorites. Following 4 funds have given consistent performance in 5/3/1 years :
* Canara Robeco Equity Tax Saver
* HDFC Taxsaver
* Sahara Tax Gain
* Birla Sun Life Tax Relief 96
Hello Shweta,
You have been doing a great work. Keep up the good work.
I am new to investments. I would like to share my profile, could you please suggest me the best savings with tax gain.
1. Maximum investment up to 30,000 in a year
2. I am looking for a short term investment as I would require the money for my sister's wedding after 4 years
3. I understand ELSS is one of the best, but will how much returns would I be getting after 4 years (if I am investing during the period 01/04/2010-01/03/2014, How much will I get as returns after 01/04/2014)
Thanks In Advance for your help & suggestions.
JJ
Hi Jithesh! Thanks for the kind words.
Regarding your query, allow me break it up in three parts :
1) Short term investment with 30,000 per annum contribution for next 4 years (01/04/2010-01/03/2014).
2) Tax benefits on these investments.
3) Expected returns after 3 years.
For the First year i.e. Apr-2010 to Mar-2011, you can go in for a Rs.2500 per month SIP in HDFC Tax Saver or Birla Sun Life Tax Relief 96. Remember the ELSS investments have a lock-in of 3 years. So, the last contribution that you make in Mar-2011 will be eligible for redemption by your target date of 01/04/2014.
For the Second Year, i.e. Apr-2011-Mar-2012, depending upon the market situation, you may look for a lumpsum investment in ELSS in the First week of April-2011 itself, so that you enjoy the tax benefit and yet make your investment eligible for redemption by April 2014.
There after it is better to invest in Diversified Equity Mutual Funds. Refer our earlier article on MF SIP for details. As all tax saving investments have a minimum lock-in of 3 years, you need to invest your monies in other avenues so that you can withdraw when needed.
Now, what is the expected returns after 3 years? Well, no one can provide you this figure and if some one does he is lying. However, Stocks as an investment class outperform all other investments over a long term, similarly systematic investments in Equity MFs is best for retail investors. Last 2 years were bad for markets due to Global Crisis. Things are improving now, in 2009 we have seen markets gaining 100% from the lows. So taking a 3 to 4 years time horizon you can expect to make a decent returns on your Equity MF investments.
In case you need any further clarification, pls feel free to leave a comment or contact us.
Helo Shweta , waw what a useful guideines you given?
Thanks for starting this article.
I have some queries regarding investment.
Can you please outline some best ELSS ?
Many Thanks,
Ramdhan Joshi
Thanks Ramdhan!
I have already outlined some good ELSS which you can consider. For your benefit I am re-listing them here :
* Canara Robeco Equity Tax Saver
* HDFC Taxsaver
* Sahara Tax Gain
* Birla Sun Life Tax Relief 96
My NRI son has taken a HDFC Standard life Young Star Policy for a duration of 20 years. He pays yearly premium of Rs. 75,000/- He has opted for investment in Growth (100% equity) plan. He has paid 3 premiums so far. His investment is on "Repatriable Basis". Can he stop paying further premiums without losing any benifits that presently policy is offering? How many minium number of premiums he must pay to keep the policy alive till maturity?
harudesai.
Dear Mr. Desai
Thanks for your query. As a matter of fact, HDFC Standard life Young Star Policy is a child plan which is a type of Insurance and not an ELSS scheme which are Mutual Funds. I am in process of analyzing child plans offered by various insurance company. I have noted down your query and will revert to you on email as soon as I have concrete analysis on the same. Request you to bear with us for some time.
Hi Shweta, thanks for the wonderful piece on info & taking pains to answering all our queries. I wanted to know this: By looking at your tables, Canara Robeco has given an average return of 19% for a 3-year period. So, lets assume I invest 60K. Taking this 19% rate, what would be my return after 3 years? I know there are other risks associated with the markets and things may not be the same after 3 years. However, just wanted to know what would be the reak value that I get after 3 years for 60K & it'd be great if you can explain me the logic or calculation. Thanks!
Thanks Sai for your query!
Canara Robeco has indeed shown splendid performance in last 1/3/5 years. You said right, their 3 years performance is 19%. Although, in any investment instrument which is linked to Stock Market past performance can not be extrapolated to predict future performance as there are numerous risks involved. But, just for explaining to you if we assume that Canara Robeco ELSS will provide 15% average returns in next three years, so your investment of Rs.60K invested today will be worth Rs.91.25K taking 15% compounded annual growth rate.
In excel this is how you will do the calculation :
60,000 * (1 + 15/100)^3 = 91,252.5
Hope this answers your query.
Thank You so much Shweta for the reply! That really helps & I understand that extrapolation is not a right thing. However, you've replied to what I was looking for. Thanks again!
you are always welcome!! Sai
thanks it really helped me in proper choice for investment.
anil
Dear Shweta,
Thank you so much for giving so much of use full information to beginners like me. request you to advise if its right to invest 60k per year in elss for tax saving. 20k alreday goes to LIC. also which is most advisable elss. is it good to continue same elss next fin year or changing is better.
Thanking you.. Deepesh
Dear Shweta
Thank you for the wonderful article.
I am planning to invest in ELSS MF for a locking period of 3 years. All my previous investments have been into HDFC Tax Saver Growth with good results. However this time (July 2010) I am looking for another fund to invest.
The listing provided by you is as of Jan2010. I would really appreciate if you kindly provide me an updated list of best performing MFs so that I can make a better decision.
Thanks and regards
Surajit
best advise given here…was just searching for investment to save the income tax.
Thanks for it.