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As we approach the new financial year, investors are increasingly looking for effective ways to save on taxes while maximizing their investment returns. Equity Linked Savings Schemes (ELSS) have emerged as one of the most popular choices for tax-saving investments in India. In this blog, we will explore the Best ELSS Tax Saver Funds 2025, highlighting their features, performance metrics, and why they could be a great addition to your investment portfolio.
Why Invest in ELSS Funds?
ELSS funds offer a dual advantage: they provide tax benefits under Section 80C of the Income Tax Act and the potential for substantial long-term capital appreciation. With a mandatory lock-in period of three years, these funds encourage disciplined investing while allowing investors to benefit from the growth of equity markets.
Key Features of the Best ELSS Tax Saver Funds for 2025
- Tax Benefits: Investments in ELSS funds qualify for tax deductions up to ₹1.5 lakh per annum, making them an attractive option for tax planning.
- High Return Potential: Historically, ELSS funds have outperformed traditional tax-saving instruments like Fixed Deposits and Public Provident Fund (PPF).
- Diversification: These funds typically invest in a diversified portfolio of equities across various sectors, which helps mitigate risk.
- Professional Management: Managed by experienced fund managers, ELSS funds are designed to optimize returns through strategic asset allocation.
Top ELSS Funds to Consider for 2025
- Mirae Asset ELSS Tax Saver Fund: Known for its robust performance and disciplined investment strategy, this fund has consistently delivered strong returns over various time frames.
- Axis ELSS Tax Saver Fund: This fund offers a well-diversified portfolio with a focus on long-term growth, making it a reliable choice for investors.
- HDFC ELSS Tax Saver Fund: With a strong track record and experienced management, this fund remains one of the top choices among investors seeking tax-saving options.
Performance Metrics
When evaluating the best ELSS funds, consider key performance indicators such as:
| Period | Scheme Returns (%) | Benchmark Returns (%) | Value of ₹10,000 Invested (₹) |
|---|---|---|---|
| Last 1 Year | 43.25 | 36.22 | 14,339 |
| Last 3 Years | 21.92 | 15.71 | 18,153 |
| Last 5 Years | 21.05 | 19.75 | 26,014 |
| Since Inception | 22.58 | 14.66 | ₹3,384,034 |
Risk Metrics
Understanding the risk associated with these investments is crucial:
- Standard Deviation: Indicates volatility; lower values suggest less risk.
- Beta: Measures the fund’s sensitivity to market movements; a beta less than 1 indicates lower volatility compared to the market.
- Sharpe Ratio: Assesses risk-adjusted returns; higher values indicate better performance relative to risk.
Axis ELSS Tax Saver Fund
The Axis ELSS Tax Saver Fund is an equity-linked savings scheme (ELSS) that provides investors with an opportunity to save on taxes while aiming for long-term capital appreciation. This fund is particularly appealing for individuals looking to invest under Section 80C of the Income Tax Act, which allows deductions on investments up to ₹1.5 lakh.
| Parameter | Details |
|---|---|
| Fund Name | Axis ELSS Tax Saver Fund |
| Scheme Type | Open-Ended Equity Linked Savings Scheme (ELSS) |
| Date of Allotment | 29th December 2009 |
| AUM (Assets Under Management) | ₹37,800.02 Cr. (as of 31st October 2024) |
| Benchmark | Nifty 500 TRI |
| Risk-Free Rate | 6.61% (MIBOR as of 31-10-2024) |
| Standard Deviation (3 Years) | 15.77% |
| Beta (3 Years) | 1.03 |
| Sharpe Ratio (3 Years) | 0.06 |
| Portfolio Turnover (1 Year) | 0.53 times |
| Fund Managers | – Mr. Shreyash Devalkar (20 years of experience) – Mr. Ashish Naik (16 years of experience) |
| Entry Load | Nil |
| Exit Load | Nil |
| Lock-In Period | 3 years (for tax-saving benefits under Section 80C) |
SBI Long Term Equity Fund
The SBI Long Term Equity Fund is a prominent equity-linked savings scheme (ELSS) that offers investors an opportunity to save on taxes while aiming for substantial long-term capital appreciation. This fund is particularly appealing for individuals looking to invest under Section 80C of the Income Tax Act, which allows deductions on investments up to ₹1.5 lakh.
| Attribute | Details |
|---|---|
| Fund Name | SBI Long Term Equity Fund |
| Scheme Type | Open-ended Equity Linked Saving Scheme (ELSS) |
| Date of Allotment | January 1, 2006 |
| AUM (Assets Under Management) | ₹27,847.48 Crores (as of November 30, 2024) |
| Benchmark | NIFTY 500 Total Return Index |
| Risk-Free Rate | Approximately 6.76% (FBIL Overnight Mibor rate as of November 30, 2024) |
| Standard Deviation (3 Years) | 13.89% |
| Beta (3 Years) | 0.98 |
| Sharpe Ratio (3 Years) | 1.22 |
| Portfolio Turnover (1 Year) | 0.22 |
| Fund Managers | Mr. Dinesh Balachandran (Managing Since September 2016) |
| Entry Load | Nil |
| Exit Load | Nil |
| Lock-In Period | 3 years |
Mirae Asset ELSS Tax Saver Fund
The Mirae Asset ELSS Tax Saver Fund is a well-regarded equity-linked savings scheme (ELSS) that allows investors to save on taxes while seeking long-term capital appreciation. This fund is particularly attractive for individuals looking to invest under Section 80C of the Income Tax Act, which permits deductions on investments up to ₹1.5 lakh.
| Attribute | Details |
|---|---|
| Fund Name | Mirae Asset ELSS Tax Saver Fund |
| Scheme Type | Open-ended Equity Linked Saving Scheme (ELSS) |
| Date of Allotment | December 28, 2015 |
| AUM (Assets Under Management) | ₹24,895.71 Crores |
| Benchmark | Tier-1: Nifty 500 (TRI), Tier-2: Nifty 200 (TRI) |
| Risk-Free Rate | Approximately 6.76% |
| Standard Deviation (3 Years) | 12.97% |
| Beta (3 Years) | 0.91 |
| Sharpe Ratio (3 Years) | 0.58 |
| Portfolio Turnover (1 Year) | 1.28 times |
| Fund Managers | Mr. Neelesh Surana |
DSP ELSS Tax Saver Fund
The DSP ELSS Tax Saver Fund is an equity-linked savings scheme (ELSS) designed to provide investors with tax benefits while aiming for long-term capital appreciation. This fund is particularly attractive for those looking to save on taxes under Section 80C of the Income Tax Act. Below is a comprehensive overview of the fund, including its performance, portfolio composition, and key metrics.
| Attribute | Details |
|---|---|
| Fund Name | DSP ELSS Tax Saver Fund |
| Scheme Type | Open-ended Equity Linked Saving Scheme (ELSS) |
| Date of Allotment | January 18, 2007 |
| AUM (Assets Under Management) | ₹16,835 Crores |
| Benchmark | Nifty 500 (TRI) |
| Risk-Free Rate | Approximately 6.76% |
| Standard Deviation (3 Years) | 13.37% |
| Beta (3 Years) | 0.95 |
| Sharpe Ratio (3 Years) | 1.01 |
| Portfolio Turnover (1 Year) | 0.37 |
| Fund Managers | Not specified in the provided data |
HDFC ELSS Tax Saver Fund
The HDFC ELSS Tax Saver Fund is an equity-linked savings scheme (ELSS) designed to provide investors with tax benefits under Section 80C of the Income Tax Act while aiming for long-term capital appreciation. Below are key details and performance metrics as of October 31, 2024.
| Fund Name | HDFC ELSS Tax Saver Fund |
|---|---|
| Scheme Type | Equity Linked Savings Scheme |
| Date of Allotment | March 31, 1996 |
| AUM (Assets Under Management) | ₹15,934.95 Crores |
| Benchmark | NIFTY 500 (Total Returns Index) |
| Risk-Free Rate | 6.61% |
| Standard Deviation (3 Years) | 12.122% |
| Beta (3 Years) | 0.862 |
| Sharpe Ratio (3 Years) | 1.166 |
| Portfolio Turnover (1 Year) | 41.25% |
| Fund Managers | Roshi Jain |
FAQ’s
- What is an ELSS Tax Saver Fund?
An ELSS (Equity Linked Savings Scheme) Tax Saver Fund is a mutual fund that primarily invests in equities and offers tax benefits under Section 80C of the Income Tax Act, allowing investors to save up to ₹1.5 lakh annually. - How do ELSS funds provide tax benefits?
Investments in ELSS funds are eligible for tax deductions under Section 80C, which reduces taxable income. This allows investors to claim deductions up to ₹1.5 lakh in a financial year. - What is the lock-in period for ELSS funds?
ELSS funds have a mandatory lock-in period of three years, meaning investors cannot redeem their units before this period ends, promoting long-term investment behavior. - What are the typical returns from ELSS funds?
Historically, ELSS funds have provided higher returns compared to traditional tax-saving instruments. Returns can vary based on market conditions, but many funds have shown annualized returns in the range of 12% to 20% over the long term. - Are there any risks associated with investing in ELSS funds?
Yes, like all equity investments, ELSS funds carry market risks. The value of investments can fluctuate based on stock market performance, and there is a possibility of losing capital. - How are ELSS funds different from other tax-saving instruments?
Unlike fixed deposits or PPFs, which offer guaranteed returns, ELSS funds invest in equities and have the potential for higher returns but come with higher risks due to market volatility. - Can I invest in multiple ELSS funds?
Yes, investors can diversify their portfolio by investing in multiple ELSS funds to spread risk and potentially enhance returns. However, it’s essential to monitor overall exposure to equity. - What factors should I consider when choosing an ELSS fund?
When selecting an ELSS fund, consider factors such as historical performance, expense ratio, fund manager experience, portfolio composition, and risk metrics like standard deviation and Sharpe ratio. - How can I invest in an ELSS Tax Saver Fund?
Investors can invest in ELSS funds through mutual fund houses directly or via online platforms and brokers. Systematic Investment Plans (SIPs) are also available for regular investments. - What are the exit options after the lock-in period?
After the three-year lock-in period, investors can redeem their units at any time. However, it’s advisable to consider market conditions and personal financial goals before making redemption decisions.
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