Before buying a mutual fund scheme, it is vital for investors to consider a host of factors. These include the past performance of a fund manager, reputation of fund house, category of scheme, macro-economic factors and importantly – the past performance of the scheme.
And when it comes to the past performance, investors compare the returns delivered by the schemes with the benchmark index returns.
Benchmark index is a yardstick against which the performance of a mutual fund is compared. It is considered vital to stay ahead of the performance delivered by the benchmarks for a fund to be called ‘outperforming’.
Here we give a lowdown on the ELSS funds and zeroed in on the ones that have managed to beat the benchmark index.
First and foremost, we explain what exactly are equity linked savings schemes (ELSS).
Equity Linked Savings Schemes (ELSS) refer to the schemes that invest at least 80 percent of their assets in accordance with Equity Linked Savings Scheme, 2005, notified by the Ministry of Finance.
Importantly, these funds have a lock-in period of three years and are eligible for income tax deduction under section 80C of the Income Tax Act up to ₹1.5 lakh.
There are 42 schemes under the category of ELSS with net assets under management (AUMs) of ₹1,79,802 crore. They have the highest number of folios among all equity-oriented schemes i.e., 1.54 crore.
The ELSS schemes which could beat the benchmark index include the following:
ELSS | 10-year returns (%) | Benchmark index returns (%) |
Quant Tax Plan | 23.55 | 15.17 |
Bandhan Tax Advantage (ELSS) Fund | 17.88 | 15.29 |
JM Tax Gain Fund | 17.66 | 15.29 |
DSP Tax Saver Fund | 17.56 | 15.17 |
Kotak Tax Saver Fund | 17.02 | 15.17 |
Axis Long Term Equity Fund | 16.54 | 15.17 |
Bank of India Tax Advantage Fund | 16.99 | 15.29 |
Invesco India Tax Plan Fund | 16.49 | 15.29 |
Tata India Tax Savings Fund | 16.59 | 15.17 |
(Source: AMFI, returns as on Oct 19, 2023)
Here we give a lowdown on the top performing ELSS:
1. Quant Tax Plan: The Quant Tax Plan Growth was launched on March 8, 2000 and has an AUM of ₹4,605 crores. The fund has a present cash holding of 3.22%. The key constituent stocks of the fund include Reliance Industries, HDFC Bank, NTPC & DLF.
2. Bandhan Tax Advantage (ELSS) Regular Fund: It was launched on Dec 26, 2008 and has delivered a return of 18.23 percent since inception. The key constituent stocks are ICICI Bank, HDFC Bank, RIL, Triparty Repo and Axis Bank.
The fund has an AUM of ₹5,073 crore.
3. JM Tax Gain Fund: It was launched on March 31, 2008 and has delivered an annualised return of 8.19 percent since inception.
The key constituent stocks are HDFC Bank, PFC, Infosys, ICICI Bank and L&T. It is a small fund with AUM of ₹90 crore.
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