5 Top Performing ELSS Mutual Funds in the last 10 years

5 Top Performing ELSS Mutual Funds in the last 10 yearsTop Performing ELSS Mutual Funds in the last 10 years


One of the best tax saving options are ELSS Mutual Funds. While the stock markets are always volatile, investing in mutual fund schemes for 5-10 years always rewarded investors with good returns. If you are willing to invest in mutual funds to save income tax, you can invest in ELSS Tax Saving Mutual Funds. If you would have invested in some of the good ELSS Mutual Funds in the last 10 years, their investment would have grown up to 4X along with tax benefits. What are ELSS Tax Saving Mutual Funds what are its benefits? Which are the Top Performing ELSS Mutual Funds in 2019 from the last 10 years?

Also Read: Best Largecap Funds to invest in 2019

What are ELSS Tax Saving Mutual Funds?


Equity Linked Saving Scheme (ELSS) Mutual Funds also known as tax saving mutual funds are open ended equity mutual funds that provide income tax benefits. Investors can invest upto Rs 1.5 Lakhs per annum in these ELSS funds and get income tax benefits u/s 80c.

What are the Benefits of ELSS Mutual Funds?


Here are some of the major benefits:

1) Investors can invest in these ELSS mutual funds to grow their money by participating in the equity market.

2) ELSS funds have lowest lock-in period of 3 years compared to any other tax saving investment option like PPF, NSC, Tax Saver FD etc.,

3) One can invest in dividend option of ELSS funds and get regular income even during the lock-in period.

4) You can invest in ELSS funds every month through SIP which would bring discipline in your tax planning benefit from stock market fluctuations month on month.

5) If you are in a higher tax bracket, it helps you to save income tax up to Rs 46,800.

How do ELSS Mutual Funds work exactly?


When you invest in ELSS mutual funds in a financial year, you are eligible to get an income tax deduction u/s 80C up to Rs 1.5 Lakhs. Means such amount can be deducted from your total income and you pay income tax only on your net income post this deduction. You can invest in ELSS mutual funds, PPF, Tax saver FD, NSC, etc., to save income tax u/s. 80C. Below example, provides clarity on how you can claim income tax benefit u/s 80C.

What are the Negative points of investing in ELSS Mutual Funds?


Here are some negative points.

1) Like other mutual funds, even ELSS Mutual Funds invest in equity and in debt instruments. Investments in equity markets are high risk.

2) ELSS funds invests in debt instruments. Mutual Funds are investing in debt papers issued by the corporate companies. However, these are turned high risk considering recent defaults by such corporate. This poses high risk to mutual fund investors.

3) ELSS Mutual Funds have 3 year lock-in period. Means you cannot take out your investment before that.

4) Though mutual fund schemes provide 12% to 15% annualized returns in the medium to long term, these are not guaranteed.

5 Top Performing ELSS Mutual Funds in the last 10 years


Now let us look at some of the top performing ELSS Mutual funds that grew by 4x and our view against them.

#1 – ICICI Prudential Long Term Equity Fund (Tax Saving)


This tax saving mutual fund gave 17% annualized returns in the last 10 years.

If you would have invested Rs 1 Lakh 10 years back, your investment would have grown to Rs 4.61 Lakhs.

If you would have invested Rs 1,000 per month through SIP for 10 years, your investment would have been Rs 120,000 and such investment would have grown to Rs 2.4 Lakhs.

Our view: This fund has outperformed its peers and gave consistent returns in the last 5-10 years. Its beta of 0.85 indicates that it is less volatile compared to its benchmark. This is one of the Best ELSS Mutual Funds to invest in 2019.

#2 – Invesco India Tax Plan


This tax saving mutual fund gave 16% annualized returns in the last 10 years.

If you would have invested Rs 1 Lakh 10 years back, your investment would have grown to Rs 4.55 Lakhs.

If you would have invested Rs 1,000 per month through SIP for 10 years, your investment would have been Rs 120,000 and such investment would have grown to Rs 2.5 Lakhs.

Our view: Even this fund has outperformed its peers and gave consistent returns in the last 5-10 years. Its beta of 0.92 indicates that it is less volatile compared to its benchmark. This is one of the Top ELSS Mutual Funds to invest now in 2019.

#3 – IDFC Tax Advantage (ELSS) Fund


This ELSS tax saving mutual fund gave 16% annualized returns in the last 10 years.

If you would have invested Rs 1 Lakh 10 years back, your investment would have grown to Rs 4.47 Lakhs.

If you would have invested Rs 1,000 per month through SIP for 10 years, your investment would have been Rs 120,000 and such investment would have grown to Rs 2.45 Lakhs.

Our view: While in the short term of 1 year this fund was under performer, it has outperformed its peers and gave consistent returns in the last 5-10 years. Its beta of 1.01 indicates that fund volatility is slightly higher compared to benchmark. This is one of the Good ELSS Mutual Funds for 2019.

#4 – DSP Tax Saver Fund


This ELSS tax saving mutual fund gave 16% annualized returns in the last 10 years.

If you would have invested Rs 1 Lakh 10 years back, your investment would have grown to Rs 4.32 Lakhs.

If you would have invested Rs 1,000 per month through SIP for 10 years, your investment would have been Rs 120,000 and such investment would have grown to Rs 2.5 Lakhs.

Our view: This fund has outperformed its peers and gave consistent returns in the last 5-10 years. Even in the short term of 1 year, this could beat benchmark and gave 6% returns. Its beta of 1.04 indicates that fund volatility is slightly higher compared to benchmark. This is one of the Best ELSS Tax Saving Mutual Fund to invest in 2019.

#5 – Tata India Tax Savings Fund


This ELSS tax saving mutual fund gave 15.6% annualized returns in the last 10 years.

If you would have invested Rs 1 Lakh 10 years back, your investment would have grown to Rs 4.25 Lakhs.

If you would have invested Rs 1,000 per month through SIP for 10 years, your investment would have been Rs 120,000 and such investment would have grown to Rs 2.55 Lakhs.

Our view: This fund has outperformed its peers and gave consistent returns in the last 5-10 years. Even in the short term of 1 year, this fund too could beat benchmark and gave 6% returns. Its beta of 1.05 indicates that fund volatility is slightly higher compared to benchmark This is one of the Top ELSS Tax Saving Mutual Fund to invest in 2019.

Note: The above article does not cover Axis long term mutual fund, which is < 10 years that is also a top performer in 5 years. If you have invested in this fund, you can continue.

Some of the Frequently Asked Questions (FAQs) about ELSS Mutual Funds


1) I have been investing in the mutual funds for the past 5-10 years, do they qualify to get tax benefits u/s 80C

You should invest in ELSS Tax Saving Mutual Funds to qualify for income tax benefits. If you are investing in non ELSS funds even for more than 3 years, these do not qualify for income tax benefits.

2) Are there any terms and conditions to withdraw ELSS mutual funds before 3 years?

ELSS Mutual Fund schemes have lock-in period of 3 years. You cannot withdraw your investment before 3 year lock-in period.

3) Financial advisors say ELSS funds are less risky, how far this is true?

ELSS funds invest in equity and debt based on their investment strategy for atleast 3 years. In short term, stock markets could be volatile, however in medium to long term of 3 to 10 years, these are always rewarded investors. Hence, ELSS Funds are less riskier compared to other equity mutual funds. However the risk is not completely eliminated.

4) Can I invest in ELSS Mutual Funds for more than Rs 1.5 Lakhs?

ELSS Mutual Fund schemes provide income tax benefits u/s 80C for the investments done up to Rs 1.5 Lakhs. However, you can still invest more than this amount in these funds. However, any extra amount invested beyond this Rs 1.5 Lakhs does not qualify for income tax benefits.

5) Some mutual fund advisors say these Tax saving mutual funds provide 20% returns, how far this is true?

Mutual funds perform differently in various stock market cycles. Don’t see the performance in just 1 or 2 years where stock markets would have performed extremely well. In normal scenario, if you can invest for 10 years, you can expect reasonable returns between 12% to 15%.

6) I am an employee and can I invest in ELSS schemes through SIP?

Mutual funds always rewarded investors who invested through SIP every month. If you are an employee and want to save income tax by investing every month, ELSS mutual funds would work well for you. You can invest through SIP in these ELSS Tax Saving Funds.

7) Among PPF and ELSS Mutual funds, which is better?

Both have their pros and cons. ELSS Mutual Funds have lowest lock-in period of 3 years compared to PPF account which has a maturity of 15 years except premature withdrawals allowed with some terms and conditions. PPF has fixed rate of interest which is declared by Govt of India every year that are relatively safe. However ELSS funds are riskier and one can expect 12% to 15% annualized returns though these are not guaranteed. Based on your risk appetite and tenure of investment, you should choose good investment option suitable to you.

8) Is there any exit load in ELSS Tax Saving Mutual Funds?

These have 3 year lock-in period. After lock-in period, if you want to withdraw these funds, there is no exit load.

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Suresh KP

5 Top Performing ELSS Mutual Funds in the last 10 years

2 comments

  • Prabhat Mohanty

    I have observed that ELSE schemes of Aditya Birla mutual fund and Motilal Oswal mutual fund have delivered negative returns for one year horizon. Can you find out the reasons for such performance. Can we expect better return if we invest now at their lows?

    • Hello Prabhat, Majority of the equity mutual funds including largecap, midcap, smallcap and tax saving funds have shown negative returns in the last 1-2 years. Stocks under SENSEX30/NIFTY50 are down except for few which has been performing well due to which the indices are showing. We are yet to see worst that is going to come in next few months

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