ELSS is Equity Linked Saving Scheme mutual funds which come under 80C for tax savings. ELSS funds offer triple benefits of tax savings, capital appreciation and tax free returns to the investor.
Few things you must know:
• It is diversified and comes under 80C for tax savings.
• The return and dividends for ELSS are tax free like in PPF.
• This has luck in period of 3 years unlike in PPF for 15 years.
• In the PPF, the investor must make at least one contribution in a year or pay a penalty. However, there is no such compulsion in ELSS funds.
• The returns are entirely dependent on market .However Some of the funds have grown 2 times in 3 years and 3 times in 5 years.
How you can maximize return from ELSS?
• Make it GROWTH option instead DIVIDEND option and choose best performing funds.
• Can make it DIRECT plan in order to save commission and other expense but your agent may not like this J
• Start through SIP for cost averaging.
Let me directly jump to return of these funds .While giving comparison I took in consideration of few of the below parameters.
• Life of fund (considered fund which is there for more than 15 years and which are new and less or equals to 10 years)
• The particular fund Vs all ELSS return
• The fund who’s AUM (Asset under Management) is more than 1000 Crore
I have taken into consideration the below funds:
1. Axis Long Term Equity (G)
2. Reliance Tax Saver (G)
3. DSP Black Rock Tax Saver (G)
4. ICICI Pru Tax Plan (G)
5. HDFC Tax Saver (G)
6. Franklin Tax Shield( G)
Comparisons of all the fund against each other V/s CNX Nifty Bench Mark V/s Avg ELSS Returns
Conclusion:
1. All the funds are beating CNX Nifty Bench mark return and Avg ELSS return except ICICI Pru Tax Plan (G) for 1 Year return.
2. In 5 Year , 3 Year and 1 year return Reliance Tax Saver(G) is beating all others with bench mark index.
3. The new fund Axis Long Term Equity(G) is 2nd best in both 3 Year and 1 Year return.
4. In 5 Year , 3 Year and 1 year return DSP Black Rock Tax Saver(G),HDFC Tax Saver(G) and Franklin Tax Shield(G) are giving consistently better return beating CNX Nifty Bench mark return and Avg ELSS return.
Absolute Annual Return of all the Funds
Conclusion:
1. It seems 2011 is the bad year for all the funds. The least affected funds are Axis Long Term Equity (G) and Franklin Tax Shield (G).The most affected fund is DSP Black Rock Tax Saver (G).
2. In 2013 only one fund showed double digit growth that is Axis Long Term Equity (G).
3. In 2009 all the funds performed exceptionally well because all recovered from 2008 market crash. In current year 2014 till date Reliance Tax Saver (G) is leading.
Funds as per their CRISIL Rating (2008-2014)
Rank 1- Excellent,Rank 2 - Good,Rank 3- Avg,
Rank 4 - Below Avg,Rank 5 - Weak
Conclusion:
1. Among the youngest fund Axis Long Term Equity(G) is giving good return and among oldest fund HDFC Tax Saver(G) is giving good return since launched.
2. Since last 3 year HDFC Tax Saver is doing avg and weak. However HDFC Tax Saver (G) is the oldest fund and has highest AUM and also holds highest return since inspection , so most of the financial adviser may bet on this.
3. Reliance Tax Saver(G) is slowly become stronger since last 3-4 years.
In case of ELSS we need to look the performance before putting money .Once we put it will be locked for 3 years. Since here the matter is for 3 years, so after taking profit one can switch to equity diversified fund to make more wealth or again consider best ELSS to invest.Hence looking at all of the above analysis below 2 funds looks attractive for 2014:
1. Axis Long Term Equity(G)
2. Reliance Tax Saver(G)
Disclaimer:
I have been invested in most of these funds and hence my analysis may be biased. Please do your homes work before investing. It is not a buy or sell recommendation. It is purely an educational blog to educate people on how to choose right fund.While doing analysis i took data from Moneycontrol.com,Valueresearch.com and Crisil rating analysis.
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