Best ELSS Or Tax Saving Mutual Funds To Invest In 2019

Equity Linked Saving Scheme or ELSS are tax saving mutual funds. ELSS is an excellent way to enjoy the twin gains of investment and tax benefits.

ELSS has a lock-in period of 3 years. This is the lowest among all tax saving investments. ELSS schemes have performed well in the past few years and gave the highest returns among Section 80C investments.

ELSS helps save Rs 46,800 a year in taxes, if you fall in the highest tax bracket. Invest in ELSS via SIPs. Systematic Investment Plans or SIPs are not mutual funds, but a method of investing in mutual funds. You can invest in ELSS with just Rs 500 a month.

ELSS has a forced lock-in of 3 years. You are forced to hold on to the investment which helps you enjoy the compounding benefit. Compounding benefit is return on return. Don’t liquidate the ELSS investment after 3 years. Stay invested for at least 4-6 years to get the maximum benefit of ELSS schemes.

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Best ELSS Or Tax Saving Mutual Funds To Invest In 2019

Best Tax Saving Mutual Funds to Invest in 2018:

You can take a look at some of popular ELSS schemes in 2018:

• Aditya Birla Sun Life Tax Relief 96
• Axis Long Term Equity Fund 
• L&T Tax Advantage Fund 
• Motilal Oswal Long Term Equity Fund 
• HDFC Long Term Advantage Fund 
• Invesco India Tax Plan
• IDFC Tax Advantage
• DSP BlackRock Tax Saver Fund
• ICICI Prudential Long Term Equity Fund.

Note: Past performance is no guarantee of future performance.

SEE ALSO:  Tax Saving Mutual Funds To Invest

How to pick best ELSS Schemes?

• Don’t rely on historical performance when picking mutual funds. They don’t always present an accurate picture. Look at risk-adjusted returns of ELSS Schemes.
• ELSS has a compulsory 3 year lock-in. Check ELSS performance over 5 years or more.
• Check Information Ratio of ELSS schemes. They show consistency of fund manager in generating higher risk adjusted performance.
• Check the number of times the ELSS scheme has outperformed the benchmark like Sensex or Nifty. Split the 5 year returns into annualized returns and compare against the benchmark.
• Check expense ratio of ELSS scheme. This is the measure of all expenses of the mutual fund scheme.
• Select ELSS funds of top 10-15 AMCs. Check the reputation and qualification of the fund manager. Pick up ELSS with considerable AUMs under management. Invest small amounts of money in ELSS via SIPs.
• Don’t invest in multiple ELSS schemes. Invest in 1-2 ELSS funds which are consistent performers. Change ELSS fund only if fundamental attributes change.
• Do remember that ELSS funds are equity diversified mutual funds, investing in a diversified portfolio across IT, auto, FMCG and pharma among others. Check if ELSS invests in small-cap, mid-cap or large-cap stocks.

How to invest in ELSS?

If you are investing in ELSS through a mutual fund distributor or a bank, they will assist with requisite documentation. You may be charged additional fees for services rendered by mutual fund distributors.

Invest in ELSS-Direct Plan:

You can invest directly with the Asset Management Company or AMC. Visit the nearest AMC Office or office of their registrar like Karvy or CAMS. You can even invest through the online portal of the mutual fund house. If you want to invest in several ELSS schemes, make sure you register and invest separately in each mutual fund house.

Mutual Fund Utilities: These are shared platforms of different mutual fund houses. You would have to create an account on mutual fund utilities, before transacting. You can invest in different ELSS Schemes across mutual fund houses with a single transaction form.

SEE ALSO:  How to invest in ELSS?

Mistakes to avoid in ELSS:

• Don’t invest a lump sum in ELSS schemes. Opt for systematic investment plans, SIPs.  
• ELSS are equity funds and you must understand risk before investing.
• Make sure investments are aligned with financial goals.
• Choose growth over the dividend option. The dividend option eats up accumulated profits.
• Take financial advice before investing in ELSS.
• Don’t invest in too many ELSS schemes.

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