Equity-Linked Savings Schemes (ELSS), also known as tax-saving mutual funds, have the potential for higher returns, and they also carry the added advantage of tax savings for investors. ELSS fund invests primarily in equity and equity-related instruments. As per SEBI norms, it is mandatory for an ELSS fund to invest at least 80% of the total funds in equity, while the remaining 20% can be invested in other assets.
ELSS mutual funds are quite popular among long-term investors due to their ability to give substantial returns alongside tax benefits. Under Section 80C of the Income Tax Act, ELSS funds allow tax deductions of up to Rs 1.5 lakh.
ELSS funds come with a mandatory three-year lock-in period. Although there’s no maximum limit for investment, you can start with as little as Rs 500, either through a lump sum investment or a Systematic Investment Plan (SIP). Here, we will review the top 5 ELSS funds and analyse their lump sum and SIP returns over the past 10 years, based on Value Research data.
Also read: MFs close 2024 with record Rs 3.9L-crore inflows
Quant ELSS Tax Saver Fund – Direct Plan
Benchmark: BSE 500 TRI
Riskometer level: Very high
Expense Ratio: 0.59%
10-year annualised return of fund: 20.88%
Benchmark’s annualised returns of 10 years: 13.86
Fund’s 10-year SIP returns: 23.65%
If someone had started an SIP of Rs 10,000 in Quant ELSS Tax Saver Fund – Direct Plan, the individual would have made a corpus of Rs 41.94 lakh over the last 10 years, with CAGR returns of 23.65%.
At the same time, a lump sum investment of Rs 1 lakh in this fund 10 years ago would have turned into Rs 6.66 lakh, with CAGR returns at 20.88%.
Bank of India ELSS Tax Saver Fund – Direct Plan
Benchmark: BSE 500 TRI
Riskometer level: Very high
Expense Ratio: 0.84%
10-year annualised return of fund: 17.55%
Benchmark’s annualised returns of 10 years: 13.86
Fund’s 10-year SIP returns (annualised): 20.42%
With this SIP returns, an investment of Rs 10,000 would have turned into a corpus of Rs 35.22 lakh.
A lump sum investment of Rs 1 lakh made 10 years ago would have turned to Rs 5 lakh,
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