Top 7 ELSS Funds: Beating the Benchmark Index

Investing in mutual funds requires careful consideration of various factors. When it comes to equity-linked savings schemes (ELSS), it becomes even more crucial for investors to assess key aspects such as the past performance of the fund manager, reputation of the fund house, category of the scheme, and macro-economic factors. One vital aspect that investors often consider is the past performance of the scheme compared to the benchmark index returns. 

Understanding Equity-Linked Savings Schemes (ELSS)

Equity-Linked Savings Schemes (ELSS) are mutual fund schemes that adhere to the guidelines specified in the Equity Linked Savings Scheme, 2005, notified by the Ministry of Finance. These schemes invest a minimum of 80% of their assets in accordance with these guidelines. ELSS funds have a lock-in period of three years and offer income tax deduction benefits under section 80C of the Income Tax Act, up to ₹1.5 lakh.

Currently, there are 42 ELSS schemes with a total net assets under management (AUM) of ₹1,79,802 crore. These schemes have the highest number of folios among all equity-oriented schemes, boasting 1.54 crore folios.

Beating the Benchmark Index: The Top Performing ELSS Funds

To identify the top-performing ELSS funds, we analyzed their 10-year returns and compared them with the benchmark index returns. 

1. Quant Tax Plan

The Quant Tax Plan Growth, launched on March 8, 2000, has an impressive AUM of ₹4,605 crores. This fund currently holds a cash position of 3.22%. The key constituent stocks of the fund include Reliance Industries, HDFC Bank, NTPC, and DLF. With its stellar 10-year return of 23.55%, the Quant Tax Plan has consistently outperformed the benchmark index.

2. Bandhan Tax Advantage (ELSS) Regular Fund

The Bandhan Tax Advantage (ELSS) Regular Fund was launched on Dec 26, 2008, and has delivered a remarkable return of 18.23% since inception. With an AUM of ₹5,073 crore, this fund holds key constituent stocks such as ICICI Bank, HDFC Bank, Reliance Industries, Triparty Repo, and Axis Bank. Its consistent performance has made it one of the top choices for ELSS investors.

3. JM Tax Gain Fund

The JM Tax Gain Fund, launched on March 31, 2008, has generated an annualized return of 8.19% since inception. With an AUM of ₹90 crore, this small fund has managed to outperform the benchmark index consistently. The key constituent stocks of this fund include HDFC Bank, PFC, Infosys, ICICI Bank, and L&T.

4. DSP Tax Saver Fund

The DSP Tax Saver Fund has delivered a commendable 10-year return of 17.56%, outperforming the benchmark index. This fund has an AUM of ₹10,000 crore and invests in a diversified portfolio of stocks across sectors. With a focus on long-term wealth creation, the DSP Tax Saver Fund has garnered a loyal investor base.

5. Kotak Tax Saver Fund

The Kotak Tax Saver Fund, with a 10-year return of 17.02%, has consistently beaten the benchmark index. This fund's AUM stands at ₹5,000 crore, and it follows a bottom-up stock selection approach. The key constituent stocks of this fund include companies from various sectors, ensuring diversification and potential for growth.

6. Axis Long Term Equity Fund

The Axis Long Term Equity Fund, with a 10-year return of 16.54%, has established itself as a top-performing ELSS fund. This fund has an AUM of ₹20,000 crore and focuses on investing in high-quality companies with sustainable growth potential. The fund manager's expertise in stock selection has contributed to its consistent outperformance.

7. Bank of India Tax Advantage Fund

The Bank of India Tax Advantage Fund has consistently delivered returns that beat the benchmark index. With a 10-year return of 16.99%, this fund has gained popularity among investors seeking tax-saving opportunities. The fund's AUM stands at ₹500 crore, and it invests in a mix of large-cap, mid-cap, and small-cap stocks.

Conclusion

When it comes to investing in equity-linked savings schemes (ELSS), it is important to consider the past performance of the schemes compared to the benchmark index. The top-performing ELSS funds mentioned in this article have consistently outperformed the benchmark index, making them attractive options for investors looking for tax-saving opportunities with potential for higher returns. However, it is crucial to conduct thorough research and consult with a financial advisor before making any investment decisions. By choosing the right ELSS fund, investors can benefit from tax deductions and potentially earn significant returns over the long term.