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. The table below lists the top ELSS funds in the current market:
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| Fund Name | Category | Risk | 1Y Returns | Rating | Fund Size(in Cr) |
|---|---|---|---|---|---|
Quant Tax Plan Fund | Equity | Very High | 16.8% | 5 | ₹4,957 |
Bandhan Tax Advantage (ELSS) Fund | Equity | Very High | 16.8% | 5 | ₹5,160 |
Bandhan ELSS Tax Saver Fund | Equity | Very High | 20.0% | 5 | ₹5,040 |
Parag Parikh Tax Saver Fund | Equity | Moderately High | 19.1% | 5 | ₹2,138 |
Kotak ELSS Tax Saver Fund | Equity | Very High | 16.6% | 5 | ₹4,122 |
SBI Long Term Equity Fund | Equity | Very High | 27.7% | 4 | ₹15,774 |
Motilal Oswal ELSS Tax Saver Fund | Equity | Very High | 27.7% | 4 | ₹2,508 |
Bank of India Tax Advantage Fund | Equity | Very High | 24.5% | 4 | ₹860 |
Mahindra Manulife ELSS Fund | Equity | Very High | 16.4% | 4 | ₹659 |
DSP Tax Saver Fund | Equity | Very High | 19.1% | 4 | ₹11,693 |
DSP ELSS Tax Saver Fund | Equity | Very High | 19.1% | 4 | ₹11,693 |
PGIM India ELSS Tax Saver Fund | Equity | Very High | 12.6% | 4 | ₹557 |
Mirae Asset Tax Saver Fund | Equity | Very High | 15.6% | 4 | ₹17,532 |
Canara Robeco ELSS Tax Saver Fund | Equity | Very High | 14.0% | 4 | ₹6,042 |
Canara Robeco Equity Tax Saver Fund | Equity | Very High | 11.6% | 4 | ₹6,042 |
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The best performing ELSS mutual funds can stand favourable to:
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.
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.
The following factors to consider when finding and choosing the best ELSS funds to invest in 2023:
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.
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.
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.
While finding the best ELSS funds 2023, ensure to check the associated risks:
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 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.
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.
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.
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.
The tax benefits of the fund apply throughout its lock-in period.
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.
Here are some of the benefits of investing in the best ELSS mutual fund in 2023:
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.
Now let us jump and check about these top 15 mutual fund schemes.
Fund Performance: The Quant Tax Plan Fund has given 34.83% annualized returns in the past three years and 28.44% in the last 5 years. The Quant Tax Plan Fund belongs to 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 | ₹4,957Cr |
| 1Y Returns | 16.8% |
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 belongs to 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% |
Fund Performance: The Bandhan ELSS Tax Saver Fund has given 27.64% annualized returns in the past three years and 19.56% in the last 5 years. The Bandhan ELSS Tax Saver Fund belongs to the Equity category of IDFC Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Bandhan ELSS Tax Saver Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹5,040Cr |
| 1Y Returns | 20.0% |
Fund Performance: The Parag Parikh Tax Saver Fund belongs to 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 | ₹2,138Cr |
| 1Y Returns | 19.1% |
Fund Performance: The Kotak ELSS Tax Saver Fund has given 22.33% annualized returns in the past three years and 18.49% in the last 5 years. The Kotak ELSS Tax Saver Fund belongs to the Equity category of Kotak Mahindra Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Kotak ELSS Tax Saver Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹4,122Cr |
| 1Y Returns | 16.6% |
Fund Performance: The SBI Long Term Equity Fund has given 25.83% annualized returns in the past three years and 18.76% in the last 5 years. The SBI Long Term Equity Fund belongs to 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 | ₹15,774Cr |
| 1Y Returns | 27.7% |
Fund Performance: The Motilal Oswal ELSS Tax Saver Fund has given 24.5% annualized returns in the past three years and 17.96% in the last 5 years. The Motilal Oswal ELSS Tax Saver Fund belongs to 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 | ₹2,508Cr |
| 1Y Returns | 27.7% |
Fund Performance: The Bank of India Tax Advantage Fund has given 24.44% annualized returns in the past three years and 23.05% in the last 5 years. The Bank of India Tax Advantage Fund belongs to 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 | ₹860Cr |
| 1Y Returns | 24.5% |
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 belongs to 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 | ₹659Cr |
| 1Y Returns | 16.4% |
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 belongs to 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% |
Fund Performance: The DSP ELSS Tax Saver Fund has given 23.19% annualized returns in the past three years and 19.05% in the last 5 years. The DSP ELSS Tax Saver Fund belongs to 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 | ₹11,693Cr |
| 1Y Returns | 19.1% |
Fund Performance: The PGIM India ELSS Tax Saver Fund has given 22.39% annualized returns in the past three years and 17.44% in the last 5 years. The PGIM India ELSS Tax Saver Fund belongs to the Equity category of PGIM India Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in PGIM India ELSS Tax Saver Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹557Cr |
| 1Y Returns | 12.6% |
Fund Performance: The Mirae Asset Tax Saver Fund has given 20.68% annualized returns in the past three years and 19.13% in the last 5 years. The Mirae Asset Tax Saver Fund belongs to the Equity category of Mirae Asset Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Mirae Asset Tax Saver Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹17,532Cr |
| 1Y Returns | 15.6% |
Fund Performance: The Canara Robeco ELSS Tax Saver Fund has given 20.57% annualized returns in the past three years and 18.91% in the last 5 years. The Canara Robeco ELSS Tax Saver Fund belongs to the Equity category of Canara Robeco Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Canara Robeco ELSS Tax Saver Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹6,042Cr |
| 1Y Returns | 14.0% |
Fund Performance: The Canara Robeco Equity Tax Saver Fund has given 20.32% annualized returns in the past three years and 18.56% in the last 5 years. The Canara Robeco Equity Tax Saver Fund belongs to the Equity category of Canara Robeco Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Canara Robeco Equity Tax Saver Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹6,042Cr |
| 1Y Returns | 11.6% |
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