Top 5 Best ELSS Tax Saving Mutual Funds to invest in 2015

Top and Best ELSS Mutual Funds to invest in 2015Top 5 Best ELSS Tax Saving Mutual Funds to invest in 2015


Last year, I have written best ELSS mutual funds to invest in India for 2014. These mutual funds have extremely done well and some of them gave extra-ordinary returns. From this year onwards, Govt. of India has increased 80C tax rebate from ₹ 1 Lakh to ₹ 1.5 Lakhs. If you are in high tax bracket of 30%, you can get tax rebate of as high as ₹ 45,000 in a year. Since 2015 is fast approaching, I thought, I would review and recommend top and best ELSS tax saving mutual funds in India to invest for 2015 too.

Also Read: How you can save income tax u/s 80C and beyond?

What are ELSS Tax Saving Mutual Funds?


If you are already familiar about this, you can skip this section. Equity Linked Mutual Funds (ELSS), commonly known as Tax Saving Mutual funds primary objective is to provide tax rebated u/s 80C (Tax rebate u/s 80C is ₹ 1.5 Lakhs from Financial year 2014-15 onwards) along with providing good returns. You can invest more than ₹ 1.5 Lakhs, however they do not qualify for 80C rebate beyond this limit. They have a lock-in period of 3 years from the date of investment. However, you can keep them beyond 3 years too for long term investment.

Advantages of investing in ELSS Tax Saving Mutual Funds?


  • Offers highest returns (not fixed and not guaranteed) compared to PPF and NSC.
  • Lowest lock-in period of 3 years. NSC has 5 years and PPF has 15 year lock in period.
  • Investors can opt for dividend option and get regular income even during the lock-in period.
  • Investing in ELSS funds through SIP every month would help you reduce burden of investing lump sum, take care of market fluctuations and provide higher returns.

Top 5 Best ELSS Tax Saving Mutual Funds to invest in 2015


These top 5 mutual funds in India have been analysed and shortlisted based on below key parameters.

  • These are picked based on highest returns received in the last 5 years
  • Which are rated by Crisil as Rank-1, Rank-2, Rank-3 and Rank-4 which indicates good fundamentals for these top 5 mutual funds.
  • Value research (VRO) 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: Reliance Tax Saver ELSS


Strategy of the fund: The mutual fund scheme aims to generate long-term capital appreciation from a portfolio that is invested predominantly in equity and equity related instruments and provides tax saving u/s 80C.

Performance of the fund: As per our analysis, this is Top-1 ELSS mutual fund which has beaten even equity mutual fund returns. It has generated 100% returns in last 1 year and 22% annualized returns in last 5 years. If one would have invested ₹ 1,000 per month through SIP, for 5 years the investment would have been ₹ 60,000 and your money would have grown to ₹ 120,000. If one would have invested ₹ 1,000 per month through SIP, for 3 years the investment would have been ₹ 36,000 and your money would have grown to ₹ 68,000.

Reasons to invest: This fund consistently beats its peer mutual fund schemes and its benchmark. AUM of this scheme is ₹ 2,940 Crores which shows investor confidence in 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 Opportunity Mutual Funds grow your money in various market conditions?

Top-2: ICICI Pru tax Plan


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: As per our analysis, this is a 2nd top ELSS mutual fund. It has generated 58% returns in last 1 year and 18.5% annualized returns in last 5 years. If one would have invested ₹ 1,000 per month through SIP, for 5 years the investment would have been ₹ 60,000 and your money would have grown to ₹ 106,000. If one would have invested ₹ 1,000 per month through SIP, for 3 years the investment would have been ₹ 36,000 and your money would have grown to ₹ 57,000.

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 ₹ 2,123 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-3: Franklin India Tax Shield


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 ELSS mutual fund as per our key parameters. It has generated 58% returns in last 1 year and 17.8% annualized returns in last 5 years. If one would have invested ₹ 1,000 per month through SIP, for 5 years the investment would have been ₹ 60,000 and your money would have grown to ₹ 103,000. If one would have invested ₹ 1,000 per month through SIP, for 3 years the investment would have been ₹ 36,000 and your money would have grown to ₹ 58,000.

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 ₹ 1,303 Crores which shows investor confidence for the scheme. Crisil Ranks this mutual fund as Rank-3 and Value Research rates this as 4-Star (4 out of 5).

Top-4: BNP Paribas Tax Advantage plan


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. It has generated 55% returns in last 1 year and 17% annualized returns in last 5 years. If one would have invested ₹ 1,000 per month through SIP, for 5 years the investment would have been ₹ 60,000 and your money would have grown to ₹ 105,000. If one would have invested ₹ 1,000 per month through SIP, for 3 years the investment would have been ₹ 36,000 and your money would have grown to ₹ 58,000.

Reasons to invest: It has beaten equity mutual funds performance. AUM of this scheme is ₹ 250 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).

Also Read: How to create and invest your emergency fund?

Top-5: 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 the 5th top performing ELSS mutual fund as per our analysis. It has generated 50% returns in last 1 year and 16.7% annualized returns in last 5 years. If one would have invested ₹ 1,000 per month through SIP, for 5 years the investment would have been ₹ 60,000 and your money would have grown to ₹ 98,000. If one would have invested ₹ 1,000 per month through SIP, for 3 years the investment would have been ₹ 36,000 and your money would have grown to ₹ 55,000.

Reasons to invest: This fund consistently beats its peer mutual fund schemes and its benchmark. This fund is a consistent performer in rising and falling markets. One should have such funds in their portfolio. AUM of this scheme is ₹ 787 Crores which shows investor confidence in the scheme. Crisil Ranks this mutual fund as Rank-4 and Value Research rates this as 4-Star (5 out of 5).

Conclusion: These best ELSS Tax saving mutual funds provides opportunity for individuals who are looking to save tax u/s 80C and also aiming to get higher returns. Since this investment option has several benefits of less lock-in period, highest returns, etc., investors can opt this as one of the best tax saving option.

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Suresh
Tax 5 Best ELSS Tax Saving Mutual Funds to invest in 2015

Suresh KP

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95 comments

    1. There is no limit per month. However you have income tax exemption limit of Rs 1.5 L per annum. Means if you invest more than Rs 12,500 per month, you would not get any income tax benefit, however you can continue to invest higher amount

  1. Hi Suresh,
    Your blog has really improved my knowledge in investment. Do keep up the good work!
    I earn 8,00000 per annum. Currently all I hold is a ULIP with an annual premium of 50000 and this ends next year. The tax i pay monthly is close to 4k. I would like to invest in a combination of ELSS, PPF and a term insurance to reduce the taxes I pay. What is the best way to do this safely? How much will I be able to bring down the tax I pay?

    1. Hi Pradeep ,

      Though i am not expert as Suresh but i can provide you a bit of your suggestion that might help you in financial planning . One fore most thing ,we should always remember risk and profit go hand in hand . If you go for more profit it also has the greater risk . So make sure that you financial planning should be diverse . It should have the component of higher profit/higher risk as well lesser profit/lesser risk .

      You can save your tax by investing into following combination :

      1) SIP Mutual Funds (HIgh Profit/bit of Market risk 15-16 ROI on an average)
      2) PPF (Lesser profit/lesser risk – 8.75 ROI)
      3) FD (Lesser Profit /lesser risk – 8.75 ROI)
      4) You can also show avail 50% saving on the amount invest in shares for first time under Rajiv Gandhi Saving Scheme.

      There are other ways as well to save the tax .

      Please let me know if it help you anyway .

      Thanks,
      Shobhit

  2. During Feb-mar-2015, Reliance Tax Saver was in top ranking but after marekt fall now its legging behind.
    Can you throw light reasons for not including Axis Tax Saver which is in top ranking and Franklin Tax Shield which is very consistent since last 15 years.

    1. Desai, Yes I do agree. These are top funds based on consistent performance, Crisil and Value research ranking. We should not just see downfall which keep happening in stock market. The other 2 funds indicated by you does not fell in top-5 based on my criteria. However ever these are good funds.

  3. Hi,Can you please explain how can i invest in these mutual funds.I have to approach an agent or go to bank?Please guide.I am a novice with these investments.

  4. Dear Sir, I plan to invest Rs 50,000 each in my and my spouse’s name in ELSS. Which funds should I go for, how to diversify my investment, should I split the money into 2 or 3 funds, and are ICICI or HDFC 3-in-1 accounts a good platform for online trading ?

    Please advise how to go about it as I am new to mutual funds.

    Regards

    Dr.Syamal Modi

    1. Hello Dr. Syamal Modi, You can invest in any of these top 5 funds indicated in this article. You can invest in 3-4 funds. You can chose any platform like ICICI or HDFC. 

  5. Hi, If i would want to diversify among various mutual funds for tax saving purpose….which are the funds i should look at if my investment amount annually is 1,00,000. I am a salaried individual.

  6. Sir, you are doing an excellent research in respect of investments/ savings/Insurance etc., & sharing with public,authentically. I would like seek your advice as a Senior Citizen.If all goes well, I find Systematic Investment in Selected/Good Mutual Funds is the best instruments in current situation in comparison to FDs/Bonds/PO Deposits/PPF/EPF etc.Periodically when these keep maturing, we should exercise our choice of redemption OR reinvestment. Please comment?

    1. Hello Mr.DS Pandher, Thanks for your comments. Ideally, if you do not need them, you should re-invest so that your money grows over a period of time and you can achieve any financial goals set by you

  7. Dear Sir

    I am new to mutual funds. I plan to invest approx. Rs 50,000 in ELSS to save tax and at the
    same time, get good returns on my investments. Can you please suggest me which
    fund or funds I should opt for, invest as a lump-sum or as SIP, for what
    duration, and how to go about this investment-through an agent or directly
    online?

    Regards

    Dr.Syamal Modi

      1. Dear Mr.Suresh

        I have prepared an approximate portfolio for me and my spouse. I request you to give your expert opinion regarding the same.

        1. To invest Rs 25000 each in ELSS funds namely Franklin India Tax Shield and ICICI Prudential Tax Plan for my wife so as to cover her 80 deficit.

        2. To invest Rs 50000 divided equally (25000+25000) in one of these combinations-HDFC Mid Cap Opportunities fund+Franklin India Smaller Companies fund OR HDFC Mid Cap Opps+UTI Mid Cap fund OR any one of these mid caps (HDFC/Franklin/UTI)+HDFC balanced fund.

        Since my 80C bracket is fulfilled, I am not opting for ELSS for myself.

        Also, I have not included large cap funds. Is this a wise decision?

        Does this portfolio seem all right to you for a start?

        Should I opt for SIP mode or go for one time investment?

        Awaiting your response.

        Regards

        Dr.Syamal Modi

        1. Hi Dr. Syamala, You are taking too much risk. You should invest in 5-6 mutual funds in various categories like large cap, mid cap and balanced funds. This way you would diversify your portfolio. Your spouse funds are right. But your portfolio you are investing in 2 mid-cap funds which are high risk. Add more in large cap and less in mid-cap funds unless you are high risk investor. Even for high risk investor, diversify your portfolio to 3-4 mid-cap funds. You should never invest in one time investment in mid-cap funds. Go for SIP only.

  8. My salary is Rs.28000 per month on hand so i want to invest Rs.10000/- pm
    please suggest investment plan for 10-15 yr period

  9. The lock-in of my ELSS is over and the invested amount has doubled. I do not need funds right now. So :

    1. Is it beneficial to hold the ELSS rather than liquidating it (as the number of units I got for this time investment were far lesser for same amount of money, trust the trend we continue over long run).

    2. Shall I think of a horizon of 10-15 years before liquidation or shall I liquidate them immediately ? (Know that all depends on market but looking at past 15 year trend the number of units acquired shall definitely help in long run).

    Kindly help.

  10. I intrested in tax saver mf 5000rs/month
    tell me five best high return 2015 where
    i done the investment in mf

  11. Dear Sri Suresh sir,

    Thanks for the informative article, which is very helpful.

    I just have a query. I want to invest about 50 K in a ELSS this year (to cover 80 C limit). Is it prudent to invest this entire 50 K at once or should I do it in 2-3 installments? My question is keeping in view the volatility in the stock market and as a result the fluctuations in the NAV of the selected ELSS scheme. Right now the NAVs are high due to rise in BSE/NSE. Will be grateful for your advise.

  12. I forgot to invest in tax planning investments this year. I had couple of housing loan till last year and which is suffice for 80C. one of them is closed on April. Is it good to invest in lumpsum at this level? or go with PPF? or any other suggestions?

    Thanks

  13. Hi Suresh,

    Thanks for those valuable informations. I have started the below SIPs of 2500/- from Nov 2014,
    1. Franklin India Smaller Companies (G)
    2. Mirae Asset India Opp Fund Reg (G)
    3. Kotak Select Focus Fund (G)
    4. ICICI Pru Tax Plan Reg (G)

    I need to invest another 30000/- for this year Tax. Could you please suggest me if I can invest 10000/- as lump sum in ELSS(Reliance, Franklin or ICICI)? and also please suggest if the above funds are good or not. I’m looking for long term (may be 10-15 years).
    Thanks,
    Himansu

  14. sir
    I plan to invest Rs 5000/- every month in mf through sip kindly advice 5 mf including one elss where I can invest Rs 1000 in every sip. Do recommend online site for investing in sip

  15. Dear SURESH KP SIR, I AM AGED ABOUT 54 YEARS AND GOING TO!RETIRE IN 6 YEARS. I AM NEW FOR SHARE MARKET AND MUTUAL FUNDS. FIRST I WANT TO ENTER INTO MUTUAL FUNDA VIA SIP. PLEASE SUGGEST VARIOUS BEST TOP CRISIL RATED MUTUAL FUNDS KEEPING IN VIEW OF MY AGE AND RISK FACTORS. I AM READY TO FACE MODERATETO HIGH RISK AND CONTINUE FOR A LONGER PERIOD OF 6-8 YEARS WITH A MONTHLY SIP OF RS.15,000 RUPEEES FIFTEEN THOUSANDS PER MONTH ONLY.

  16. Suresh JI,

    on tax saving fund can we go on Divdend option as we get regular dividend plus a increase in NAV also a return .
    So we get double return in Dividend plan and .

    Kindly correct if iam thinking wrong.

    regards,
    ARAV SHREEVAS

  17. Hi Sir,

    I want to invest 5000 per month though SIP in Mutual Fund For 3 Year.

    Pleaese Recomed me some Best fund for investment.

    Regards
    Manu Sharma

  18. Hi Sir,
    Thanks a lot for this valuable advices you provided.I need your help as which brokerage firm I should go with to purchase various mutual funds,currently I am having an account in ICICI Prudential but unable to have a transaction for mutual funds other than ICICI.
    Thanking you in advance for your valuable time and support.

    Warm Regards,
    Kapil Awadhwal.

  19. Hello,
    Please suggest if it is good time to invest in Mutual fund when the sensex is zooming all time high, as MF are directly linked to market. What if we invest now and sensex falls again.

    Regards
    Sudhir

  20. Sir,
    I WOULD LIKE TO INVEST LUMPSUM IN BANKING SECTOR ESPECIALLY ICICI PRU BANKING AND FIN SERVICES.ALSO IN BIRLA SL PURE VALUE & UTI MNC. I WANTS TO KNOW GROWTH PROSPECTS OF MANUFACTURING ENGG & CAPITAL GOOD AUTOMOTIVE AND BANKING SECTOR

  21. Hi Sir,

    Really nice and informative article thanks a lot…

    Is this a right time for investing in these plans (i.e. icici,reliance,franklin) ,I want to invest around 1 Lakh for FY 2014-15.

    Thanks in advance for the guidance…!!!

  22. thanks sir..
    to share your thoughts on investing on each and every aspects of investment,..its really help us to invest our money in right place..sir i have one query for ELSS, like if start sip today for ELSS then my maturity would fall after 03 years on same installment or it would vary on each and every monthly installment .

  23. if one makes a profit of say 10000rs. (short term gain) on sale of equity share and falls within the basic income exemption limit of 2.5lac…will he have to pay the tax of short term cap. gain at 15%

  24. Thanks sir
    your article always guide us to invest best palace .sir i have one query that if i invest 5000 per month through sip ,than my locking period would be 03 years for each and every instalment or my locking period would be same according to my first installment .
    means my locking period will change according to for each and every installment or it will remain same as first instalment of 03 years duration..

  25. hi suresh.. thanks for d valuable post..

    i am planning to invest rs 8000 pm in ELSS.. is it advisable to invest in 2 or 3 ELSS schemes or it will be expensive because of charges charged by AMC.

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

  26. Hi Suresh,

    I am planning to invest Rs- 50,000/- lumsum in ELSS for this year for 80C. kindly suggest good ELSS for lumsum investment.

    Regards,
    Ravikanth

  27. Another good article and well done sir!

    What does it mean to have a balanced portfolio of debt and equity when financial advisors advise investors to do so. Equity I believe would be shares/mutual funds but what does Debt mean and is it the same as fixed deposit?

    1. Debt includes debt funds and all fixed deposit options like FD/RD, MIS schemes, NCD’s, Bonds etc., Debt in simple term is non equity/insurance investment option

  28. Thanks a lot Suresh
    A very valuable article
    Last year you had suggested axis equity and bnp paribas , do you think it is not good to continue in these funds ? I had a sip in axis so wondering should I close that and start a fresh one in icici ?
    Thx & regds
    Jagadish

  29. Hai Sir, I am very much interested in your blog, regularly reading it. after reading your blog i invested in 4 mutual funds, they are giving good returns… thanks alot. i am taking homeloan of 12lakh from icici at 10.10% per annum. tenure is 25 years… total loan interest to be paid is around=20,96,700 and principal+interest=33,02,700… Sir, my question, if i want to pay partial amount around 5lakh after two years or so, what will be the impact of this on principal amount which i got loan and interest , emi, tenure. How bank acts on this? will you please give me details

    1. Your principal amount would get reduced to that extent. Many banks are not charging any penalty for pre-payment you can check with your bank about complete info

      1. Thank you very much…. If principal amount reduced, what about emi and interest, tenure…will you please explain

        1. When you do pre-payment, two things would happen. They would reduce the tenure e.g. if you have to pay for 15 years and do part payment, principal would reduced to say 12 years or 10 years depending on the pre-payment amount. Your EMI remains same. Second option is you can request banks to continue the tenure for 15 years and ask them to reduce EMI amount every month.

  30. Hi suresh

    Thanks for your recommendations. And I have started to invest and divided the money 50-50% between in reliance and icici else fund

  31. Hi suresh,

    Can you explain why “Axix long term equity fund’ (ELSS) is not included into your top 5.
    To me it is one of the top 3 as per Crisil and Value reaserch. I am about to invest in these fund. kindly Guide.

    Reagars
    CN

  32. Can I make one time investment on ELSS fund and wait for a good return after 3 years? Will that be risky.

    To average if I invest in the next year as top-up in same fund should I wait for one more year to withdraw the amount invested this year. (that is lock-in period will be calculated from next year right for this as well next year investment). Please clarify. Otherwise Im interested to invest in ELSS scheme.

  33. Hi Suresh,

    I am planing to do a fixed deposit of 100000/- in Shiram Transport for 5 years and from there side the tax will not detect.
    After maturity of this bond the tax will detect as per the slab.but i have one quire,

    If i have home loan the tax will detect or not after maturity of this bond.

    Thanks

  34. If I start the SIP in ELSS funds…. each SIP will lock-in for 3 years or it will be accommodate end of each year ??

  35. Hi suresh,

    I do not want to take benefits under 80c, but I want to invest in ELSS due to good return which are tax free. Should I go for investment in more than one ELSS schemes

  36. Hi Suresh

    Is there any reason why the Axis long term equity fund is not considered in this article.

    thanks
    Krishna

  37. Suresh,

    What abt funds like HDFC Tax Saver, L&T tax advantage. Also Canara Robeco Equity Tax Saver rating has slipped down. Do you still recommend it.

  38. Thanks for the article, really valuable advice.
    Suresh can we invest in direct plans of these funds also as they are not rated.

  39. Hi Suresh,

    What about the prospectous of the below funds for long term future investments?

    1) UTI Trasportation and Logistics -Growth
    2) Reliance Pharma Fund – Growth
    3) SBI Pharma Fund – Direct Growth
    Kindly share your thoughts…….
    Thanks…….
    Loyit.

  40. Hi Suresh,

    I have invested 1 lac in November in Sbi Magnum Tax Gain Scheme (G), lock period is 3 years.i am using this one under 80c for year 2014-2015

    What are you views about Sbi Magnum Tax Gain Scheme (G).

    Any recommendations on Tax Gain Scheme under 80 c for year 2015-2016

    Regards,

    Sampath

  41. Suresh ,
    I didnt do the SIP thi year. Hence I wanted to do a bulk investment on these ELSS(top 4)..is it the right time to do ? (or) i need to wait for some more time for get the unites in lower price?

    Thanks ,
    Arun

  42. Hi Suresh,
    Perfect timing for this article. Everyone must be busy in Tax planning.
    But actually correct me if I wrong, each SIP will be considered as new investment. So in general Lock in period will be 6 years for entire amount to be withdrawn.
    but return wise no one can beat ELSS, thats for sure.
    Gr8 article. Looking forward for list of Top 10 best MF to invest in 2015.
    Thanks.

    1. srry how? If i had made my first SIP on 1st Jan, 2014 wouldnt i be entitled to withtdraw 100% of my amount after 1st Jan,2017. so how lock in period is 6 yrs?

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