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

The Author

Suresh KP

Suresh KP i.e. me have written 1,800+ articles on this blog. I have done by B.Com from Osmania University and then MBA-Finance from Symbiosis University, Pune. I have over 20 years of experience in analyzing various investment options and money saving ideas. I love doing financial planning, Mutual Fund Analysis, Searching long term Stocks for wealth creation, IPOs, reviewing Insurance Products, analysing Health insurance Plans etc.

86 Comments

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  1. Hi suresh !!!

    THANKS for the valuable info..

    i am planning to invest around Rs. 7000 per month in elss. would it be advisable by investing in 2 or 3 different funds? or its expensive because of charges charged by AMC.

    Also what is ur view on HDFC LONG TEM ADVANTAGE ELSS and AXIS LONG TERM EQUITY??

    1. Don’t depend on single fund. That is the best way to diversify. Even the other two funds are good. However in my view, they would rank after 5+

  2. Hi Suresh,

    Thank you for your article and it is quite helpful.

    I’m planning for investing 10K under 80cc for tax benefit. Could you please advice me hw to plan and for hw much tenure i shd be investing to get good benefits. Also, could yopu please adsvice me on the tax deduction on returns under indexation

    Many Thanks,
    Gopal

    1. Best way is to invest in ELSS funds which offers tax benefits for low duration along with high returns

  3. 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.

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

  4. 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.

    1. Good funds Rishi. I am posting an article on top ELSS funds next Thursday. You can go thru them and invest

  5. 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

    1. 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.

      1. Thank u Sir for replying my email.

        Sir could u please advise me on fresh sip, which am going to start. I have specified in my previous email.

        Regarding OPEN ENDED EQUITY SCHEME.

        Waiting for ur reply.

        Thanking u once again.

        Asif

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