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

Suresh KP

86 comments

  1. 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? ?

    1. 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.

  2. 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

    1. 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.

  3. 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

     

     

     

     

    1. 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.

      1. 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

  4. 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 

  5. 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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