Top 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
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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.
Dividend option is where you would get regular income by way of dividned. Growth fund is where you would get returns only when you sell the units
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
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
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,
I am in processing of writing good funds for 2015 and coming next week. Pls review and invest in them
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…..
These are tax saving mutual funds. If you are looking 80C, you can consider them. If you want to invest for long term, you need to invest in large cap funds.
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