Top 5 Best ELSS Tax Saving Mutual Funds To Invest In 2018

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With 10% Income tax slab vanished and only 20 % & 30% slab remaining, there is more need for tax saving options. Tax saving mutual funds offer the perfect platform for tax saving and wealth creation. With average 23.56% returns per year, it will satisfy all your investment needs with tax saving.

What Are ElSS Tax Saving Mutual Funds?

You can skip this section if you already know it. 🙂

ELSS: Equity Linked Saving Scheme is one of the types of mutual funds which offer tax-saving u/s 80 of income tax. If you are in the tax bracket of 30% then this fund can save your tax up to 46,300/-. You can get tax benefit on investment up to Rs 1.5 Lakhs Max.

Performance of ELSS mutual funds for past 3 years

performance of tax saving mutual funds

What are advantages of investing in ELSS mutual funds?
  • Income Tax Saving under section 80.
  • Capital Gains from ELSS funds are completely tax-free.
  • Compared to other tax saving instruments like FD or PPF, ELSS funds have a very short lock-in period of 3 years.
  • Both Dividend and Growth option available.
  • Tax saving & Wealth creation under the same umbrella.
  • SIP option available for monthly investment for long term.
  • No Exit load as it by default crosses 1-year tenure.
What are disadvantages of investing in ELSS mutual funds?
  • ELSS funds invest your money in stock market, hence your investments are subject to market risks.
  • NO liquidity for 3 yrs lock-in period.
  • SIP in this fund has the biggest disadvantage your lock-in period starts after every monthly installment. Means if you invest for three years monthly your lock-in period will get over after next three years.

Best ELSS Tax Saving Mutual Funds To Invest In 2018

I have picked top 5 funds after analyzing following  key factors

  • Performance of funds in last 5 years.
  • Value research rating for these funds.
  • Crisil ranking for the fund.
  • Expense Ratio (Funds required to operate mutual fund)
  • More than 500 cr  AUM ( Assets under management)

Best ELSS Tax Saving Mutual Funds To Invest In 2018

1. Axis Long Term Equity Fund

This fund is best in ELSS mutual fund class. It is a consistent performer since its launch with AUM more than Rs 15,000 Cr and growing.

  • Last 5 Year Returns: 22.15%
  • Expense Ratio: 1.27 % (For Direct Plan) (Lower the better)
  • Value Research Rating: 5 Stars ( More the better)
  • Crisil Ranking : 3 Stars (Lower the better)
Why To Invest In This Fund?

Invest in this fund for long-term returns. This fund invests major part in Large caps. It has consistently given 22% annualized returns since inception. This fund has generated 31.67% in last 1 year and 14.6% in last 3 years.

2. Aditya Birla Sun Life Tax Relief 96 – Direct Plan

This fund ranks 2nd in our list another performer since inception. This fund aims at long-term earning. It invests 80% of its corpus in balanced and debt funds.

  • Last 5 Year Returns: 21.59%
  • Expense Ratio: 1.28% (For Direct Plan) (Lower the better)
  • Value Research Rating: 5 Stars ( More the better)
  • Crisil Ranking: 2 Stars (Lower the better)
  • S&P BSE 200 Vs Fund : 13.49% Vs 21.59%
Why Invest In This Fund?

This fund has given outstanding results in last 5 years. 37.14% returns in last 1 year, 16.73% returns in last 3 years. Invest in this fund for the long term for benefits. This fund is managed by Ajay Garg Since 2006. The value of SIP investment of Rs 1000 from December 2012 now would be 1,04,175(Dec 2017).

3. DSP BR Tax saver fund

This fund ranks 3rd in our list. It has performed very well and established in the very short period of time. The flow of fund was so much that recently they stopped taking funds.

  • Last 5 Year Returns: 20.34%
  • Expense Ratio: 1.25% (For Direct Plan) (Lower the better)
  • Value Research Rating: 4 Stars ( More the better)
  • Crisil Ranking: 3 Stars (Lower the better)
  • S&P BSE 200 Vs Fund : 14.41% Vs 20.34%
Why Invest In This Fund?

This fund has given 25.33% returns in last 1 year. It has also outperformed sensex in terms of returns. The fund is managed by Rohit Singhania since July 2015. It invests in the diversified portfolio for medium to long-term capital appreciation. The value of SIP investment of Rs 1000 from December 2012 now would be Rs 1,04,296 (Dec 2017).

4. reliance tax saver fund

This fund ranks 4th in our list. It has performed very well and established in very short period of time. The flow of fund was so much that recently they stopped taking funds.

  • Last 5 Year Returns: 22.40%
  • Expense Ratio: 1.21% (For Direct Plan) (Lower the better)
  • Value Research Rating: 3 Stars ( More the better)
  • Crisil Ranking: 3 Stars (Lower the better)
  • S&P BSE 200 Vs Fund : 14.41% Vs 22.40%
Why Invest In This Fund?

This fund has given 37.67% returns in last 1 year. It has also outperformed sensex every year in terms of returns. The fund is managed by Ashwani Kumar since July 2005. It invests in the diversified portfolio for medium to long-term capital appreciation. The value of SIP investment of Rs 1000 from December 2012 now would be Rs 1,10,988 (Dec 2017).

5. franklin india tax SHIELD Fund

This fund ranks 5th in our list. It has AUM of 3,410 crores as on date and growing.  This fund invests in PSU bonds and debentures with a sizable amount in equity.

  • Last 5 Year Returns: 18.53%
  • Expense Ratio: 1.29% (For Direct Plan) (Lower the better)
  • Value Research Rating: 4 Stars ( More the better)
  • Crisil Ranking: 3 Stars (Lower the better)
  • S&P BSE 200 Vs Fund : 14.41% Vs 18.53%
Why Invest In This Fund?

This fund has given 25.8% returns in last 1 year. It has also outperformed sensex in terms of returns. The fund is managed by Lakshmikanth Reddy since July 2016. The value of SIP investment of Rs 1000 from December 2012 now would be Rs 96,120 (Dec 2017).

Also Read: Are Mutual Funds Best Way To The Financial Freedom?

Read more: Are Mutual Funds Best Way To Financial Freedom

Wrap Up

All tax saving mutual funds come under moderate risk category, which means most of the investment is done under equity. I have shortlisted top 5 ELSS tax saving mutual funds for your ready reference. When considered for long-term all funds come on the same platform. Now it’s your choice to select a fund for you.

 

Best Tax saving mutual funds

 If you have some ideas or suggestions please let me know in comment section below. I will be more than glad to know your views.

 

 

 

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