Top 5 Best ELSS Tax Saving Mutual Funds for 2016
Last year, I have written best ELSS tax saving mutual funds to invest in India for 2015. These mutual funds have given superior returns. One can invest in tax saving funds and save tax u/s 80C upto ₹ 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. Which are the top 5 best performing ELSS Tax Saving Mutual Funds to invest for 2016? Which Tax Saving Mutual Funds you should invest in 2016 through SIP to get highest returns? Which are the best ELSS Funds to invest in 2016?
What is ELSS Tax Saving Mutual Funds in India?
If you are already familiar about these funds, you can skip this section. Equity Linked Mutual Funds (ELSS), commonly known as Tax Saving Mutual funds provides tax rebate u/s 80C upto ₹ 1.5 Lakhs apart from providing higher returns as they invest in direct equity. You can invest more than ₹ 1.5 Lakhs, however they do not qualify for 80C rebate beyond this amount. 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. Hence you should invest in Best ELSS mutual funds to invest in sip.
Also Read: 13 Ways to save tax and get tax free income of over ₹ 10 Lakhs
Advantages of investing in ELSS Tax Saving Mutual Funds
- Offers highest returns (not fixed and not guaranteed) compared to other tax saving schemes like PPF and NSC.
- Lowest lock-in period of 3 years. NSC has 6 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. However one should note that 3 year lock-in period applies to each and every SIP. As an example, if your SIP is on 10-Nov-15, it has lock-in period of 3 years. Your next SIP is on 10-Dec-15, even this too would have 3 years lock-in period. Hence I am comparing returns for atleast 5 years assuming that investor would invest for 2 years and his last SIP would expire only after 5 years period.
Top 5 Best Performing ELSS Tax Saving Mutual Funds for 2016
These top 5 mutual funds in India have been analysed and shortlisted based on key parameters.
- Picked based on highest returns received in the last 5 years.
- SIP returns has also been considered in listing under top funds. Hence you would see some funds moving out of our bucket recommended last year as a small shift in holding value would shift it out of top 5 funds. There are also new funds came in due to this change. This would benefit investors instead of simply looking at lump sum investment returns.
- Funds which are rated by Crisil as Rank-1, Rank-2, Rank-3 and Rank-4 which indicates good fundamentals for these top 5 tax saving 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.
- Note that due to market volatility, you could see less returns in last 1 year and some you even see negative returns. This is temporary phenomenon and you should not avoid good funds in this process.
Important Note: Some blogs / Websites / Portals have recommended top 10 tax saving funds where SIP returns are very low. Means if you invest lump-sum, you would have got benefitted, but if you invested through SIP, you would be looser. Hence check SIP returns too before investing in any of such funds. I have taken care to consider SIP returns too as part of my analysis in this article.
Top-1: 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 the 1st top performing ELSS mutual fund. It has generated 9.6% returns in last 1 year and 17.5% 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 ₹ 114,000. 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 ₹ 56,000.
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 ₹ 6,236 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). I feel this is one of the best ELSS Funds to invest in 2016.
Top-2: 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-2 ELSS mutual fund. It has generated -1% (negative) returns in last 1 year and 12.7% 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 ₹ 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 ₹ 53,500.
Reasons to invest: You could see negative returns in last 1 year, but it is due to market volatility. AUM of this scheme is ₹ 4,213 Crores which shows investor confidence in the scheme. Crisil Ranks this mutual fund as Rank-4 and Value Research rates this as 4-Star (4 out of 5). You should consider this as one of the best ELSS Funds to invest in 2016.
Also Read: Which are the Best Tax Saving Investment Plans in India?
Top-3: Religare Invesco Tax Plan
Strategy of the fund: The scheme aims to generate long-term capital growth from a diversified portfolio of mostly in equity and equity-related securities. It will aim to have concentrated well researched portfolio for around 20 – 50 stocks.
Performance of the fund: As per our analysis, this is Top-3 best performing ELSS mutual fund to invest in 2016. It has generated 8.7% returns in last 1 year and 12.3% 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 ₹ 99,000. 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 ₹ 52,000.
Reasons to invest: This fund is new entrant in my top 5 tax saving funds list. AUM of this scheme is ₹ 255 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). Hence this is one of the Best ELSS mutual funds to invest in sip.
Top-4: BNP Paribas Long Term Equity 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 continues to be in 4th top performing SIP mutual fund under tax saving. It has generated 6.5% returns in last 1 year and 13% 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 ₹ 100,000. 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 ₹ 51,000.
Reasons to invest: It has beaten equity mutual funds performance even in this volatility market. AUM of this scheme is ₹ 408 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). You can consider this is one of the Best ELSS mutual funds to invest in sip in 2016.
Top-5: Franklin India TaxShield 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 5th top performing mutual fund if one would have invested through SIP mode. It has generated 8.7% returns in last 1 year and 13.3% 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 ₹ 98,200. 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 ₹ 51,000.
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 ₹ 1,810 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). Make this as part of of your Best ELSS mutual funds to invest in sip.
Also Read: Best SIP Mutual Funds to invest for long term in 2016
Conclusion: These best ELSS Funds to invest in 2016 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 them as one of the best tax saving options.
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Suresh
Top 5 Best ELSS Tax Saving Mutual Funds for 2016
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Hi Suresh,
I already invest 5000 in SIP
(1) DSPBR Micro Cap -Rs.2000
(2) HDFC Mid Cap Rs.1000
(3) ICICI Pudentiam MF-2000
My Question is i want to invest around 50K in tax saving cound you tell me which one is the best for investment and for best return how many year i have to keep the fund.
Kindly suggest me any one time investment (Not Tax Savings) in SIP for Lomg terms.
Regards'
Shayanti
3rd fund name is not indicated completely. Other 2 funds are good, however they are high risk funds. For tax saving you can invest in DSP BR Tax saver fund and Reliance tax saver fund. Don’t invest thru lumpsum, but go for SIP for next 6-9 months. Regd lumpsum, I don’t advice you to invest in lumpsum as markets are at peak
Hi,
Very informative. I am new to this field. i have to invest in SIP for short terms as well as long terms. could you please suggest me schemes to be taken as per the current market in 2017.
Thank you
Hi suresh,
Thganks for your posting such informative blog and i would like to invest 5000/month in mutual funds for 5 yrs pls suggest me mediam risk fund to invest
suggest me 3 best tax saving funds for young salaried investors and retired investors??
Hi Varsha, These funds indicated suit all categories of investors. However, one should be willing to invest for 3-5 years minimum to get good returns from these Top Performing ELSS funds.
Hi Suresh,
I read your blog and its good. I am new to this field I would like to invest 5k for this year in mutual fund. Could you please suggest. Can you please provide little explanation about the SIP.
Can you pls suggest two or three best ELSS sip funds to invest for long term goals… I’m planning to invest 7500 to 8000 per month..
I am planning to invest in ELSS Mutual funds SIP.
I am planning to invest 7500 to 8000.
Also planning to invest in the beginning of the month one sip on all mutual funds, middle of the month one sip on all mutual funds and end of the month of the month one sip on all mutual funds..
for ex: if i want to invest in axis LT tax saving fund 1500 per month. I will split 1500 into three sip’s as follows,
between 1 to 10 date of the month 500 sip
between 11 to 20 date of the month 500 sip
between 21 to 30 date of the month 500 sip
is this good method to follow or only one sip any day of the month is good.if so suggest better dates to invest sip every month.
Pls suggest which are all elss sip mutual funds from the below list can I invest and how much i can invest on each as per ur selection:
Axis Long Term Equity
Birla Sun Life Tax Relief 96 D
Franklin India Taxshield Fund
ICICI Prudential Long Term Equity (Tax Saving)
Reliance Tax Saver (ELSS) Fund-G
BNP Paribas Long term 23
DSP BlackRock Tax saver
Sundaram Taxsaver D
HDFC Taxsaver Fund
Good funds Hari, keep investing in these top ELSS funds
Hi Suresh sir,
I am regular reader of your articles and benefited by investing MF recommended by you.
But in CANARA ROBECCO EQTY TAX SAVER, return in 21 months investment is 6%. Please advice if I should continue or switch to other CANARA MF or any other MF .
Regards
You can invest in better ELSS funds. Check this article. https://myinvestmentideas.com/2015/11/top-5-best-performing-elss-tax-saving-mutual-funds-for-2016/
Sir,
I have one small query, if i invest in ELSS, apart from 80CC, the amount I get on maturity is it tax free?
Hi Suresh
I want to invest 3000 per month in 3 ELSS funds (Rs.1ooo in each fund).
Axis Long Term Equity Fund – Regular Plan (G)
Birla Sun Life Tax Relief 96 (G)
What is the best possible way to invest in SIPS and to avoid the transaction charges.
Should i invest monthly 1000 to each of the 3 funds ? or is there any best way to invest 3k per month ? Please suggest
And also please suggest me 3 best ELSS funds to invest for long term.
Hi Suresh –
I am currently investing in below ELSS mutual funds through SIP.
1. ICICI Pru L/T Eq (Tax Sav) Gr Fund
2. Reliance Tax Saver Gr Fund
3. Axis L/T Equity Gr Fund
4. Tata India Tax Svgs Reg Gr Fund
5. Motilal Oswal MOSt Focused L/T Reg Gr Fund
6. Franklin India Taxshield Gr
My questions are –
1. Do you think 6 mutual funds are too many to have in ELSS. I have 4 other equity funds split into small-cap, mid-cap, sector fund (pharma) and multi-cap.
2. If 6 are too many which funds among the above mentioned funds can I drop?
Thanks,
Mukesh
Mukesh, You can select 2-3 funds in ELSS category. Axis l/t equity, franklin India tax shiedl, reliance tax saver are top funds from your category, others you can exit.
you have said that ‘Axis Long Term Equity Fund – Gr’ has gained over 9% last year but i have this fund in my portfolio since last year(May-2015) but it has given only Overall Return : 2.08% so why its difference in % that you have provided???
Hello, I want invest monthly 5k and I have so much confusion in picking either NPS or ELSS, (i am looking for Axis and Franklin for long term over 10 years), and regarding NPS, as per the latest tax offer of 50k by govt how that can help if i want to invest in these three, can you please advice.
I am 30 Years of age unmarried living in Pune and earning 65000 per month take home salary (including EPF deduction). I plan to invest 15000 in monthly SIP as of now which will be increased every year.
My investment horizon is 22-25 Years. My expenses per month are around 35K including rent.
My goals and amount needed for them are as below. All amounts are inflation adjusted.
1. Child education and marriage at around 15 Years – 50 Lakhs.
2. Retirement at around 55 Years – 2 Crores plus.
3. Home in about 10 Years from now – 25 Lakhs.
4. Car in 5 Years – 5 lakhs (rest will be used from Car loan; Total Value of car 7 Lakhs).
5. Mid term goals like family vacations, home/furniture upgrade etc – 2 Lakhs in every 3-4 years.
**Apart from this, I have my sisters marriage in about 18 months from now for which I need to accumulate 1.5 Lakhs minimum. I can invest 8000 Monthly over and above my portfolio specially for this.
Shortlisted Funds:
1. Franklin India Prima Plus (MultiCap) 2000 Per Month (Long term goal)
2. Birla Sunlife Front line Equity 2000 Per month (long term goal)
3. HDFC Mid Cap Oppurtunities(MidCap) 1000 Per MOnth (Long term goal)
4. Mirae Asset Emerging BlueChip (MidCap) 1000 Per month (Long term goal)
5. Tata Balanced Fund
6. EPF of 2200 per month will be used for retirement and cover a part of my debt portfolio for retirement.
Axis Long Term Equity (ELSS) 3500 Per month.
Reliance tax saver 3500
My questions are as below.
1. Is the current choice of funds in line with my goals.
2. I plan to use balanced funds for any of my medium term goals which is of 4-5 years and ELSS for Child education and marriage. Is this correct ?
3. Should I go for traditional Large Cap Mid cap portfolio (60:40 Ratio) or Multicaps are good
4. Should I go for direct plans right away or should I place a switch to direct after 1 year when I complete in regular plan. I can track direct plan portfolio using external tools available like on VRO. I think I can do that.
5. Could you please guide me for any debt/income/short term plan for my sisters marriage – I can invest 8000 Monthly over and above my portfolio specially for this. Need some tax effecient and low risk option. This amount is critical.
6. How good are these funds for 20+ years, Basically I want to know whether such funds would continue for these long years keeping in mind we have some merged funds, closed funds over long term.
7. I ignored Value discovery fund since it has grown to enormous Aum and I fear it will meet the same fate as HDFC top 200. Is this correct that funds growing in Aum considerably find difficult to show same stellar performance as they shown previously
Hi Abhishek, 1) Good portfolio 2) Don’t invest in equity funds for 4-5 yrs as they may not give good returns 3) Invest in diversified portfolio containing large cap, mid-cap and balanced funds. Combination depends on your risk appetite. If you ar ehigh risk investor, add more in mid-cap/small cap segment 4) If you have some time and can do own KYC, you can go for direct plans 5) Regd debt, check this article https://myinvestmentideas.com/2015/04/top-10-best-debt-mutual-funds-to-invest-now/ 6) These funds are good for high tenure 7) I agree, you can ignore
Thank you so much Suresh. 🙂
Very lucid presentation.I liked this.
Thanks Krishna.
Dear Suresh,
I would like to invest in Birla sun life tax relief-96. Is it a good fund? It is not in your list.
Also there is one more fund from them – birla sun life tax plan. Which one is good pls suggest.
hi, its mid-feb now. can I invest 1 lac now in any of these. Please guide
Since markets are volatile and taking correction, you can invest lumpsum too
Hi Suresh,
Thanks for the article. I would like know whether Growth plan or dividend plan will gives good returns for min 5 yrs
Which one we can choose?
Unless you are not expecting any regular income, you should invest in growth option. You can invest for over 5 years to get good returns.
Hi Suresh,
I am planning to invest in SBI ELSS scheme . I would like to know your opinion about the same. Also , currently i am based out of India and i dont have a MF account. However i have a active savings account with SBI , will it be possible to start this ELSS investment scheme online ? How could you please let me know how can initiate ELSS with SBI ?
Thanks,
regards,
PL
Hi Mr. Suresh…I want to invest an amount of Rs. 70K by Feb 16 with tax benefit and minimum lock in period. What is best option as per you? Pls advice.
Thanks..
Hi Suresh,
I want to invest in ELSS. But I’m new to this. What I have to do if I want to invest in Axis long term equity fund? Do I need to contact Axis bank for this? Please let me know. Thanks in advance.
You can invest directly through Axis MF website. Alternatively you can open MF account with icicidirect or fundsindia and start investing
Hi Suresh,
Can i switch my ELSS MF holding from one AMC to other, considering the lock-in period ?
No Rohit. This have lock-in period of 3 years, you cannot touch them
Hi Suresh,
Need your assistance regarding 4 else funds which I am planning to invest within couple of days.
Before that I have a confusion regarding the following funds. Every following funds have two entries in money control one with growth option ( rating available existing plan) and one is with direct growth option ( rating not available started in 2013). What is the difference with growth and direct growth?
I am planning to invest the following funds which do not have ranking in money control. Could you please review and let me know if I choose the right ones or not and if not can you suggest some funds in which I can invest now.
1. Axis long term equity fund – direct plan(G) – without rank money control
2. Religare Invesco Tax Plan – direct plan(G)
3. Birla Sun Life Tax Relief 96 – direct plan(G)
4. IDBI Equity Advantage Fund – direct plan(G)
Waiting for your reply urgently as well as if you can suggest some more.
Thanks
Kalyanasish
all ELSS funds are not ranked by Crisil. My suggest is to invest in funds I suggested.
dear sureshji, I am a regular reader of your articles and follow your ipo suggestions . Reg MF investments,i feel sunlife taxrelief 96 is one of the top performer and better than reliance tax saver. I hv investments in( ELSS schemes) Reliance, HDFC , Pruicici and BSL. Worst performer is HDFC followed by reliance. I am not a finance guy. correct me if I am wrong! Tks. Sam
Hello sir,
Thank you for the informative and valuable posts.
How is the defence sector wrt investment choice and are there any mutual funds investing in this sector?
With the Indian govt focusing on Make in India,is there a lot of growth scope in Indian defence industry?
Thank you
Good point, but there are no companies directly in defence sector. Those which are supporting, mutual fund companies are are already investing in them. Invest in large cap funds.
Dear Suresh,
I have been investing in ELSS Schemes from past 5 years (Rs.3000 Each). I have invested in
1. Canara Robeco Equity Tax Saver (G):- Past 5 years
2. HDFC Tax Saver (G) : Past 3 years
3. DSP BlackRock Tax Saver Fund (G) : Past 3 years
4. ICICI Prudential Long Term Equity Fund (Tax Saving) (G) : Past 1 year
Now my dilemma is whether to continue with the above said ELSS tax saving schemes or to go with the Schemes which you have suggested in this article
Thank you in Advance…
Regards
Raghavendra
Raghavendra, Invets in the funds which I suggested.
Hi Suresh, kindly have a look at the below and advice whether I should continue the same or switch…started from June 2015, axis long term equity (elss) – 1000/ month
Icici prudential value discovery – 1000/ month
Hdfc mid cap opportunities – 1000/ month.
Also suggest some 1-2 good funds to invest via sip. Thanks in advance.
Good funds Aniruddha. You can invest in ICICI Focussed blue chip fund or Birla SL Frontline Fund
Thanks Suresh for your quick response.
Do not recommend for any Reliance Fund or stock or any type of investments, in future these will cheat do froud like sahara etc.
Dear Suresh thank u for the above article,
I have been investing in ELSS Schemes from past 5 years (Rs.3000 Each). I have invested in
1. Canara Robeco Equity Tax Saver (G):- From past 5 years
2. HDFC Tax Saver (G) : from past 3 years
3. DSP BlackRock Tax Saver Fund (G) :3 years
4. ICICI Prudential Long Term Equity Fund (Tax Saving) (G) : from past 1 year
Now my dilemma is whether to continue with the above said ELSS tax saving schemes or to go with the Schemes which you have suggested in this article
Thank you in Advance…
Regards
Raghavendra
Dear Suresh,
I found reading your analysis for the last two funds, i.e. BNP long term equity fund & Franklin India Tax Shield Fund; the parameters for the former is stated as (6.5% in last 1 yr, 13% annualized return for last 5 yrs, AUM 408 crores) and the later is stated as (8.7% in last 1 yr, 13.3% annualized return for last 5 yrs, AUM 1,810 crores). But still you have ranked the Franklin India Tax Shield Fund in the 5th position and BNP long term equity fund. Is there any other thing you have considered?
Thanks & Regards
Jayant Ganguly
The sorting is done on 3 year returns out of the total 5 funds I recommended.
How can you NOT include BSL Tax Saver 69?
Darshan, It is underperformer in last 5 years. It generated only 10% annaulised returns in last 5 years. If there are better funds, why should you invest in such underperforming funds?
Over 5 yrs returns are ordinary…what is long term investment future now?