Top 5 Tax Saving Mutual funds (ELSS) in India to invest for 2014

Top 5 Tax Saving Mutual funds (ELSS) in India to invest for 2014Top 5 Tax Saving Mutual funds (ELSS) in India to invest for 2014

Few days back, I have written an article about Tax saving bank FD schemes and several readers appreciated that it indeed was a useful info for them during this time. A couple of my friends advised me to write about top tax saving mutual funds in India to invest for tax saving (ELSS). Dec is approaching very fast and salaried individuals need to plan for their tax savings. Salaried individuals can invest in tax saving mutual funds / ELSS mutual funds as part of section 80C up to Rs 1 Lakh. In this article, I would detail about best tax saving mutual funds in India to invest for 2014.

What are tax saving mutual funds (ELSS)?

Tax Saving Mutual funds (ELSS-Equity Linked Saving Schemes) primary objective is to provide tax rebated u/s 80C (Maximum u/s 80C is Rs 1 Lakh) along with providing higher returns. ELSS Mutual funds have a lock-in period of 3 years from the date of investment.

Also read: Best Large cap mutual funds to invest for long term

Top 5 Tax Saving Mutual funds (ELSS) in India to invest for 2014

  • These top 5 mutual funds in India have been arrived based on below parameters.
  • Top 5 funds picked based on highest returns received in the last 3 to 5 years
  • Funds which are rated by Crisil as Rank-1, Rank-2 and Rank-3 which specifies good fundamentals for these top 5 mutual funds.
  • Value research rated these mutual funds as 5 star and 4 star.
  • AUM (Assets under management) > 100 Crores. This proves investor confidence among these top 5 mutual funds.

Top # 1: Can Robeco Equity TaxSaver

Strategy of the fund: This fund invests in large cap and mid-cap companies and can invest in small-cap as and when the opportunity arises. It invests majorly in financial services and technology companies.

Performance of the fund: This is a top performing mutual fund and its 5 year returns are 23% per annum which has beaten even equity mutual fund returns. It gave 8% returns in last 1 year.

Reasons to invest: This fund consistently beats its peer mutual fund schemes and its benchmark. One should have this fund in their portfolio. AUM of this scheme is Rs 550 Crores which shows investor confidence in the scheme. Crisil Ranks this mutual fund as Rank-2 and Value Research rates this as 5-Star (5 out of 5).

Top # 2: ICICI Pru tax Plan Mutual fund

Strategy of the fund: This fund invests in large cap up to 65% of its portfolio and balance in mid-cap companies. Its investment strategy is to invest for 3 to 5 years in growth companies across market capitalization.

Performance of the fund: This is a 2nd top performing mutual fund and its 5 year returns are 22.5% per annum which has beaten even equity mutual fund returns. It yielded 10% returns in last 1 year.

Reasons to invest: This is diversified multi-cap fund with average risk and high growth prospects. One should have this fund in their portfolio. AUM of this scheme is Rs 1,353 Crores which shows investor confidence in the scheme. Crisil Ranks this mutual fund as Rank-3 and Value Research rates this as 4-Star (4 out of 5).

Top # 3: Franklin India Tax Shield Mutual fund

Strategy of the fund: This fund’s primary objective is to invest in medium to long term in growth companies and provide investors with IT rebate.  It invests in 50 to 55 companies across various market capitalization.

Performance of the fund: This is a 3rd top performing mutual fund and its 5 year returns are 19% per annum which has beaten even equity mutual fund returns. It yielded 9.6% returns in last 1 year.

Reasons to invest: This scheme is from one of the reputed old houses which has vast experience and works well in volatile markets too. AUM of this scheme is Rs 890 Crores which shows investor confidence for the scheme. Crisil Ranks this mutual fund as Rank-2 and Value Research rates this as 5-Star (5 out of 5).

Top # 4: BNP Paribas Tax Advantage plan Mutual fund

Strategy of the fund: It aims to get long term capital growth by diversifying its portfolio across various sectors.

Performance of the fund: This is the 4th top performing mutual fund under tax saving and its 5 year returns are 17.6% per annum. It yielded 12.9% returns in last 1 year.

Reasons to invest: It has beaten equity mutual funs performance. AUM of this scheme is Rs 129 Crores which shows investor confidence for the scheme. Crisil Ranks this mutual fund as Rank-1 and Value Research rates this as 5-Star (5 out of 5).

Also Read: How salaried individual can save income tax from 80C and beyond?

Top # 5: Axis Long Term Equity Fund

Strategy of the fund: Invests in a diversified portfolio of strong growth companies with sustainable business model. Its benchmark is BSE-200 stocks, but invests beyond that. It invests 50% in large cap and balance in other market capitalization stocks.

Performance of the fund: This is a 5th top performing mutual fund under tax saving and its 3 year returns are 7% per annum. It yielded 13.5% annaulised returns in the last 2 years.

Reasons to invest: Fund has flexible to invest across all sectors and market capitalization. The performance of the fund shows the confidence and future prospects. AUM of this scheme is Rs 635 Crores which shows investor confidence in the scheme. Crisil Ranks this mutual fund as Rank-1 and Value Research online ranks it as a 5-Star rating.

Conclusion: Tax saving mutual funds (ELSS) provides good opportunity for individuals who are looking to save tax u/s 80C and to get higher returns. Investing in these top 5 mutual funds provides scope for you to diversify your investments and yield higher returns over a period of time.

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Suresh
Top 5 Tax Saving Mutual funds (ELSS) in India to invest for 2014

Article by Suresh

Suresh KP i.e. me have written 500+ articles on this blog. I love doing analysis and identifying the Best investment options.

78 Comments

  1. pk says:

    Suresh – Your analysis is very helpful and gives quick and right information to a lot of taxpayer . Thank You for your help .

    Could you please help me to solve my below query .

    ppf=80c tax saving+tax free returns +15 years +8.75 %return (revised )
    ELSS= 80c tax saving + returns would be taxable on indexation +3 years lock + 9% – 12% return .

    Could you pleae help to understand what is indexation and how its calculated in ELSS .
    Example if we do SIP for Rs1000 and assume fund value is 50k after 3 years from elss .Then how much tax we need to give while withdrawing the fund.

    • Suresh KP says:

      Hi, You can refer this article about knowing indexation. Note there is change in taxation, hence this article is yet to be updated. http://myinvestmentideas.com/2013/04/how-mutual-fund-returns-are-taxed/

  2. Rishi says:

    Hi Suresh

    I have been investing in tax saving mutual funds since 2011. My port folio has these funds:
    1) Can Robeco Equity Tax Saver – G
    2) Fidelity Tax Advantage Fund – G
    3) HDFC Tax saver – G
    4) ICICI Pru. Tax – G

    For 2014 I would like to invest ~ 25K in ELSS. Should I invest in existing funds or choose others ? Should I go for SIP from next year?
    Please suggest.

  3. SAYED ASIF says:

    HI Sir,
    U have excellent knowledge of MFs. Kindly guide me looking at my present & future SIP,

    1) HDFC TAX SAVER – RS. 3000 SIP SINCE 2009 WILL FINISH ON 2015
    2) DSP BR TAX SAVER – RS. 1000 SIP SINCE 2009 WILL FINISH ON 2015
    3) RELIANCE TAX SAVER – RS. 1000 SIP SINCE 2009 WILL FINISH ON 2015.

    1) Want to start BNP Long Term Equity rs. 2500 SIP ELSS
    2) Want to start AXIS Long Term Equity rs. 2500 SIP ELSS

    4) IDFC PREMIER EQUITY RS. 2000 SIP SINCE 2012 WILL FINISH ON 2017
    5) DSP BR TOP-100 FUND RS. 2000 SIP SINCE 2013
    6) FRANKLIN INDIA FLEXI-CAP FUND RS. 2000 SIP SINCE 2013
    7) SBI-MF PHARMA FUND RS. 1000 SIP SINCE 2013

    1) WANT to start ICICI PRU DISCOVERY FUND RS 2000 ( OPEN ENDED )

    KINDLY GUIDE ME TO CONTINUE N HELP ME TO PRUNE MY PORTFOLIO IF REQUIRED.

    THANK YOU.

    Asif

    • Suresh KP says:

      Good Funds Asif. However take out Franklin India flexi cap fund and consider better funds like Reliance Equity Opps funds (which is also diversified fund). Also regd tax saving funds, remove DSP BR Tax saver fund. There are better funds like ICICI Pru tax plan etc., I am posting article on this Thursday about top tax saving funds, you can review them.

  4. sadhana says:

    hi,

    also, i find that the same fund is availble under direct plan. eg SUNDARAM TAX SAVER (G) & SUNDARAM TAX SAVER – DIRECT PLAN (G)

    Iknow the difference between dividend and growth plans. but dont know what is direct plan. please shed some light.

  5. sadhana says:

    Hi Suresh,

    Thanks a lot for your reply on my query regarding new nfo v/s established funds. i was really confused because i felt that i will end up buying more units in NFO than in established funds. your answer cleared the confusion. Still i feel, i should invest in nfo of reputed companies some times :)

    now i want to invest in elss to take advantage of enhanced limit of rs 150,000.

    i went through your above list and tried to compare the ratings with moneycontrol.com’s ratings which are based on crisil criteria i guess. surprisingly i found that a few of the above funds were not ranked there because they were not fulfilling certain criteria of crisil and CAN ROBEKO is ranked as below average

    will you please throw some light on the rankings.

    thanks

    sadhana

    • Suresh KP says:

      Rankings are giving based on consistent performance, AUM and how well they are performing in various market cycles. Pls see my article next week about ELSS funds where you would get more clarify

  6. Arav Shreevas says:

    SIr,

    Can i invest my money in ELSS for more then 3 years to get good return . Which fund are good to invest in ELSS at present time.

    regards,

  7. Venkatesh says:

    Hi Suresh,

    I required your suggestion to start my 1st time investment in MF.After going through your blog for last one month i have decided to invest in Reliance Tax Saver (ELSS) Fund (G) -1k,ICICI Prudential Tax Plan (G)-1k per month in SIP method.Recently i have contacted distributor also . So now Please tell me can i invest above funds through distributor or any other method would you suggest and also please tell me your opinion about selection of my funds.Thanks ,would be awaiting for your response…..

  8. Arav Shreevas says:

    suresh ji,

    i have invested 40 k lumsum in 15 nov2011 . now its lock in is going to complete. Can you please guide me what i do now. should i continue with this or invest some where else.

    rgds
    ARAV

  9. vyn chary says:

    sir,thanks fr advice on tax savings matter.sir,my question is after lock in period i.e.,3 years of elss ,is there any tax have to pay. thanks.

  10. Rajanandan says:

    Hi Suresh,

    Can you provide some high performing tax saver mutual funds for investment for 2014-15. Also, your opinion on IDFC Premier Equity, ICICI Focused blue chip and UTI Mid cap funds with Rs. 1000 SIP every month.

    Thanks,
    Rajanandan

    • Suresh KP says:

      Good to hear that you want to invest in tax saving mutual funds. You can invest in Can Robecco Tax Saver fund, Franklin India tax shield fund, ICICI Pru tax plan mutual fund. All these are good for 3 to 5 years investment. You can invest them thru SIP to take care of market fluctuations. Regd IDFC Premier, it is good one. ICICI Focussed blue chip and UTI mid cap also good. You can also invest in HDFC Mid cap opps and Franklin india opps fund for higher returns.

  11. Elina says:

    Hi,

    This is Elina ,I am coing under 20%.

    I am intretsed few tax free and which are coming under 80c ULIP plan .

    Please suggest which are the best plans.

    Thanks
    Elina

  12. Kr Kishore says:

    Hi Suresh,

    Needed a help to understand my action. My ELSS Axis MF investment have given me 100+ % return and will be out of locking period by end of this month. I have invested Rs.60000/- and will be getting around 125000. Question is with the percent of returns would it be wise to take payout and benefit or to continue ?
    Please advise.
    Kishore

  13. shalin says:

    Helo sir,
    I need to know about tax saving plans…

    What should we do,
    Where to invest this year?

    Can you please guide us.
    As i would like to consume all the limit of it so.

  14. shalin says:

    Hello suresh.
    I m planning to take aegon religare term insurance.

    As i m 24 years old; this is the only company that covers me till 75 year of my age.

    so how is this company?
    Could we keep trust on this company?
    Or
    i should move to another company? ?

    • Suresh KP says:

      Aegon Claim Settlment ratio is low at 83%. Means for every 100 claims received, they are able to close only 83. What happens if we are part of 17 applications when our family claims it. You shoud always check for high settlement ratio companies. LIC, HDFC, ICICI and SBI comes with high settlment ratios.

  15. ritU says:

    Hi Suresh,

    I read your replies, in one post you have mentioned that the returns on ELSS are taxable on indexation. Please clarify, I was under the impression that the returns are tax free provided lock in is of 3 years. I fall in the 20 % Tax bracket and since the deduction limit has increased to 150000, I wanted to save the additional limit in either Tax FD or ELSS. What do you recommend according to my tax bracket?
    If ELSS, i had shortlisted ICICI Pru tax saver and Reliance tax saver fund. Also please suggest websites from where i should evaluate MF’s performance.
    If Bank FD, which ones do you recommend based on the highest interest paid currently??

    Thanks

    • Suresh KP says:

      Hi Ritu, ELSS funds offer tax saving u/s 80C. Means whatever you invest you would get eligibility u/s 80C upto Rs 1.5 Lakhs in a financial year. However the returns are taxable under indexation. This is one of the best way where you would pay small amount compared to other ways where you would pay tax based on your individual tax slab.

  16. Atul says:

    Dear Suresh,

    I am a regular viewer of your blog and have started doing SIP based on the suggestions given you. I am already doing investment in ICICI Focussed Blue chip, SBI Emerging Business Fund, ICICI Balanced Fund . Now after increase in Income tax rebate under section 80 c from 1.00 Lakh to 1.50 lakh in want to invest Rs 30,000/- addItional amount left after all me savings under 80 C schemes .

    I am considering taking a term Policy since i dont have any term policy in my portfolio (all are endowement policy), Apart from this i am also considering to invest in ELSS scheme (Reliance Tax Saver Fund) . 

    Please tell which is better option for me to invest this additional of Rs 30,000/- in Insurance Plan (Term Plan) or ELSS (SIP).

    Regards

    Atul

     

     

     

     

    • Suresh KP says:

      Atul, Your first preference should be to have adequate insurance. If your current insurance (which u already taken) is not sufficient, you should go for term insurance. Then you can take ELSS schemes. You have not indicated tax bracket. If you are high tax bracket, go for PPF where you can get tax free returns.

      • Atul says:

        Suresh,

        I am presently in 20% tax bracket. All my insurance plan are endowment plan with sum assured of around Approx Rs 12.00 Lakh + Bonus+ loyalty .

        Should i buy Term plan …. or ELSS or PPF.

        Thanks

  17. Sameer says:

    Suresh,

    I want to invest Rs 4000/- in an ELSS. Please suggest some good funds that can return high value in the next 3 years.

    Thanks!
    Sameer 

  18. nikhil says:

    Hi,

    I want to invest in ELSS funds for tax savings, planning to invest 6000 pm; selected following funds pl provide your input for the same:

    1 Reliance Tax saver fund direct(G) 4000

    2. ICICI Pru Tax Mutual fund direct (G) 2000 

    or AXIS long term equity direct (G) 2000.

    Pl suggest whether allcation of amount is  appropriate for funds and its selection. YOur reply would be highly appreciable.

     

    Regards,

    Nikhil

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