An ELSS fund (equity-linked savings scheme) has an asset allocation that forms as 65% invested in equity and equity-linked securities, with some exposure to fixed-income securities as well. Unlike other mutual fund schemes, this scheme has a lock-in period of 3 years.
It is the only type of mutual fund eligible for tax deductions under provisions of Section 80C of the Income Tax Act, 1961. Here, you can claim a tax rebate of up to Rs. 1,50,000 and save up to Rs. 46,800 in a year through taxes alone.
Disclaimer: Below-mentioned is a list of some of the best-performing ELSS Funds in India. These funds have been listed based on their 1-year Return, Fund size, Rating, and Risk.
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List of Elss Mutual Funds in India
| Fund Name | Category | Risk | 1Y Returns | Rating | Fund Size(in Cr) |
|---|---|---|---|---|---|
| Quant Tax Plan Fund | Equity | Very High | 25.8% | 5 | ₹5,614 |
| Bandhan Tax Advantage (ELSS) Fund | Equity | Very High | 16.8% | 5 | ₹5,160 |
| SBI Long Term Equity Fund | Equity | Very High | 52.0% | 5 | ₹28,000 |
| Quant ELSS Tax Saver Fund | Equity | Very High | 46.5% | 5 | ₹11,124 |
| Parag Parikh Tax Saver Fund | Equity | Moderately High | 23.8% | 5 | ₹2,137 |
| Parag Parikh ELSS Tax Saver Fund | Equity | Moderately High | 34.1% | 5 | ₹4,152 |
| Bank of India ELSS Tax Saver Fund | Equity | Very High | 43.4% | 5 | ₹1,487 |
| Motilal Oswal ELSS Tax Saver Fund | Equity | Very High | 66.4% | 4 | ₹3,983 |
| HDFC ELSS Tax Saver Fund | Equity | Very High | 43.5% | 4 | ₹16,422 |
| Bank of India Tax Advantage Fund | Equity | Very High | 36.3% | 4 | ₹951 |
| Mahindra Manulife ELSS Fund | Equity | Very High | 16.4% | 4 | ₹658 |
| JM ELSS Tax Saver Fund | Equity | Very High | 51.5% | 4 | ₹181 |
| DSP Tax Saver Fund | Equity | Very High | 19.1% | 4 | ₹11,693 |
| ITI ELSS Tax Saver Fund | Equity | Moderately High | 56.3% | 4 | ₹398 |
| DSP ELSS Tax Saver Fund | Equity | Very High | 46.0% | 4 | ₹17,488 |
| View All |
Who Should Invest in ELSS Funds?
The best performing ELSS mutual funds can stand favourable to:
1. Investors Who Want to Save through Tax
ELSS funds are appropriate for any taxpayer prepared to take the risks of an equity-associated tax-saving device. This is the only 3-year scheme coming under Section 80C for tax benefits.
2. Long Term Investors
As previously mentioned, ELSS funds have a lock-in period; this lock-in period ensures you stay invested in the fund for at least three years. Moreover, these funds tend to perform much better when you continue, even after the lock-in period, to witness the growth potential.
Assessing your returns on ELSS mutual funds investments is easy. Simply use theELSS calculatorand estimate your returns over a period of your choice.
Factors to be Considered while Investing in ELSS Funds
The following factors to consider when finding and choosing the best ELSS funds to invest in 2024:
- Lock-In Period of the Fund
ELSS funds come with a lock-in period, as mentioned earlier, and the minimum lock-in period of the fund is three years. The investments need to be kept for a minimum of three years, and it is not possible to redeem the holdings before it. Therefore, the investors who invest in these funds will have to be considerate of this factor.
- Returns of the Fund
You should be aware that ELSS funds do not provide guaranteed returns because they are fully contingent on the performance of the underlying securities. A longer investment horizon, however, can yield larger returns than any other tax-saving investment alternative.
- Investment Horizon
To invest in ELSS funds, you need to have a longer investment horizon, perhaps longer than five years. To limit market volatility, the equity exposure of ELSS funds requires a longer investment horizon.
Major Advantages
Here are some of the benefits of investing in the best ELSS mutual fund in 2024:
- Shortest lock-in period: The 3-year lock-in period of ELSS mutual funds is the shortest among other tax-saving investment options. For example, PPF has a minimum maturity period of 15 years. Hence, tax-saver fund schemes are more liquid.
- Potential to generate high returns: Contrary to ELSS mutual funds, other tax-saving investment options, like bank fixed deposits and PPF, generate a fixed income. Conversely, ELSS funds invest in stocks of different companies, and their NAV fluctuates accordingly. An uptick in prices of such underlying securities can yield sizeable returns for investors.
- Tax benefit: Investments up to Rs.1.5 lakh are eligible for tax deductions as per the provisions of the Income Tax Act.
Investment modes: Two routes via which individuals can invest in the best ELSS mutual funds are – Systematic Investment Plan and lump-sum. SIP allows individuals to invest in a scheme by paying fixed instalments at regular intervals (monthly, quarterly, annually, etc.). On the flip side, the lump-sum method allows investors to allocate the available funds to an ELSS mutual fund scheme in one go.
Risks Involved While Investing in ELSS Funds
While finding the best ELSS funds 2024, ensure to check the associated risks:
- Liquidity Risk
Liquidity risk in mutual funds refers to the probability that investors will be unable to redeem their investments without experiencing a loss in value. Investments in ELSS funds will be subject to a three-year lock-in period. The investor cannot redeem or transfer his or her ELSS investment during the lock-in period.
- Market Risk
Market risk is the probability that investors will suffer losses as a result of the market's bad performance. There are numerous reasons that might have an adverse effect on stock market prices, including recession, political considerations, market sentiment, and so on.
Equity Linked Savings Schemes must invest at least 80% of their assets in equity securities. As a result, an ELSS fund's portfolio is subject to market risk.
FAQ
Q1. Are ELSS funds better than mutual funds?
ELSS and mutual funds differ only because of the tax deductions and lock-in period factors. If an investor wants an investment plus tax saving option, he/she can opt for ELSS funds.
Q2. Are ELSS funds tax-free after a period of 3 years?
The taxation of an ELSS fund works such as -
The invested has redeemed the fund at Rs. 3 lakh, and based on the criteria of deduction, Rs. 1.5 lakh will be exempted from tax. Thus, after deducting Rs 1.5 lakh from Rs 3 lakh, taxable income equals Rs 1.5 lakh.
Q3. What are the demerits of ELSS funds?
There are two major risks associated with this fund, and that is liquidity and market risk. This means they can't be liquidated when required; you will have to stay invested for a fixed period, and since these funds invest majorly in equity markets, it does not hold guaranteed returns.
Q4. How many years is the tax benefit of the ELSS fund?
The tax benefits of the fund apply throughout its lock-in period.
Q5. Who should not invest in ELSS?
ELSS mutual funds are more suitable for long-term investors. Hence, if you have a longer investment horizon, ELSS can be a good choice.
Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
Let's have a closer look
Now let us jump and check about these top 15 mutual fund schemes.
Quant Tax Plan Direct Growth
Fund Performance: The Quant Tax Plan Fund has given 34.96% annualized returns in the past three years and 30.25% in the last 5 years. The Quant Tax Plan Fund comes under the Equity category of Quant Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Quant Tax Plan Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹5,614Cr |
| 1Y Returns | 25.8% |
Bandhan Tax Advantage (ELSS) Direct Plan Growth
Fund Performance: The Bandhan Tax Advantage (ELSS) Fund has given 28.88% annualized returns in the past three years and 18.62% in the last 5 years. The Bandhan Tax Advantage (ELSS) Fund comes under the Equity category of IDFC Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Bandhan Tax Advantage (ELSS) Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹5,160Cr |
| 1Y Returns | 16.8% |
SBI Long Term Equity Fund Direct Plan Growth
Fund Performance: The SBI Long Term Equity Fund has given 27.9% annualized returns in the past three years and 28.9% in the last 5 years. The SBI Long Term Equity Fund comes under the Equity category of SBI Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in SBI Long Term Equity Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹28,000Cr |
| 1Y Returns | 52.0% |
Quant ELSS Tax Saver Fund Direct Growth
Fund Performance: The Quant ELSS Tax Saver Fund has given 26.32% annualized returns in the past three years and 39.24% in the last 5 years. The Quant ELSS Tax Saver Fund comes under the Equity category of Quant Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Quant ELSS Tax Saver Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹11,124Cr |
| 1Y Returns | 46.5% |
Parag Parikh Tax Saver Fund Direct Growth
Fund Performance: The Parag Parikh Tax Saver Fund comes under the Equity category of PPFAS Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Parag Parikh Tax Saver Fund via lump sum is ₹500 and via SIP is ₹1,000.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹2,137Cr |
| 1Y Returns | 23.8% |
Parag Parikh ELSS Tax Saver Fund Direct Growth
Fund Performance: The Parag Parikh ELSS Tax Saver Fund has given 20.9% annualized returns in the past three years and 26.65% in the last 5 years. The Parag Parikh ELSS Tax Saver Fund comes under the Equity category of PPFAS Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Parag Parikh ELSS Tax Saver Fund via lump sum is ₹500 and via SIP is ₹1,000.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹4,152Cr |
| 1Y Returns | 34.1% |
Bank of India ELSS Tax Saver Direct Growth
Fund Performance: The Bank of India ELSS Tax Saver Fund has given 20.14% annualized returns in the past three years and 30.14% in the last 5 years. The Bank of India ELSS Tax Saver Fund comes under the Equity category of Bank of Idia Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Bank of India ELSS Tax Saver Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹1,487Cr |
| 1Y Returns | 43.4% |
Motilal Oswal ELSS Tax Saver Fund Direct Growth
Fund Performance: The Motilal Oswal ELSS Tax Saver Fund has given 27.26% annualized returns in the past three years and 28.94% in the last 5 years. The Motilal Oswal ELSS Tax Saver Fund comes under the Equity category of Motilal Oswal Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Motilal Oswal ELSS Tax Saver Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹3,983Cr |
| 1Y Returns | 66.4% |
HDFC ELSS Tax Saver Direct Plan Growth
Fund Performance: The HDFC ELSS Tax Saver Fund has given 25.1% annualized returns in the past three years and 24.87% in the last 5 years. The HDFC ELSS Tax Saver Fund comes under the Equity category of HDFC Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in HDFC ELSS Tax Saver Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹16,422Cr |
| 1Y Returns | 43.5% |
Bank of India Tax Advantage Direct Growth
Fund Performance: The Bank of India Tax Advantage Fund has given 24.97% annualized returns in the past three years and 24.76% in the last 5 years. The Bank of India Tax Advantage Fund comes under the Equity category of BOI AXA Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Bank of India Tax Advantage Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹951Cr |
| 1Y Returns | 36.3% |
Mahindra Manulife ELSS Fund Direct Growth
Fund Performance: The Mahindra Manulife ELSS Fund has given 23.75% annualized returns in the past three years and 17.14% in the last 5 years. The Mahindra Manulife ELSS Fund comes under the Equity category of Mahindra Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Mahindra Manulife ELSS Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹658Cr |
| 1Y Returns | 16.4% |
JM ELSS Tax Saver Fund Direct Plan Growth
Fund Performance: The JM ELSS Tax Saver Fund has given 23.72% annualized returns in the past three years and 27.15% in the last 5 years. The JM ELSS Tax Saver Fund comes under the Equity category of JM Financial Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in JM ELSS Tax Saver Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹181Cr |
| 1Y Returns | 51.5% |
DSP Tax Saver Direct Plan Growth
Fund Performance: The DSP Tax Saver Fund has given 23.19% annualized returns in the past three years and 19.05% in the last 5 years. The DSP Tax Saver Fund comes under the Equity category of DSP Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in DSP Tax Saver Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹11,693Cr |
| 1Y Returns | 19.1% |
ITI ELSS Tax Saver Fund Direct Growth
Fund Performance: The ITI ELSS Tax Saver Fund comes under the Equity category of ITI Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in ITI ELSS Tax Saver Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹398Cr |
| 1Y Returns | 56.3% |
DSP ELSS Tax Saver Direct Plan Growth
Fund Performance: The DSP ELSS Tax Saver Fund has given 21.38% annualized returns in the past three years and 26.36% in the last 5 years. The DSP ELSS Tax Saver Fund comes under the Equity category of DSP Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in DSP ELSS Tax Saver Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹17,488Cr |
| 1Y Returns | 46.0% |
