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Comparing ELSS Mutual Funds Returns Over the Years

  • Feb 27, 2024

However, what if your investment allowed you to reduce your tax liability? Any investor would benefit from exploring tax-saving alternatives, and ELSS is one of them.

We'll make an effort to distinguish between the two using a variety of metrics to acquire a rational and precise understanding of the various factors involved in investing in ELSS and Equity mutual funds. So, you must be aware of the following important information regarding ELSS mutual funds comparison.

ELSS Funds And Equity Funds: Are They The Same?

Yes, from the standpoint of a portfolio. Despite being categorized as a different kind of fund, the ELSS is, in all actuality, an equity fund. An ELSS fund's fundamental guideline is that its investments should be mostly made in stocks. The sole distinction is that these funds have a three-year lock-in.

This implies that you will be unable to withdraw your money from these funds after you have invested for a period of three years. An ELSS's portfolio is practically identical to that of a typical equity fund.

ELSS Funds Comparison: Key Differences

Here is an in-depth ELSS funds comparison in tabular format:

Basis

ELSS Funds

Mutual Funds

Definition

ELSS funds are tax-saving equity mutual funds that facilitate long-term capital gains and tax savings.

Financial products called mutual funds can assist investors in achieving their long- and short-term objectives.

Types

Equity funds

Debt and hybrid funds

Tax Deduction

According to the Income Tax Act of 1961 Section 80C, an investment in an ELSS is deductible from taxes.

A tax deduction is not available for mutual fund investments.


Lock-In Period

Three years

NA

Liquidity

Less liquid than other mutual funds

More liquid than ELSS funds

Investment Timeline

Standard tenure is 5-7 years

Standard tenure ranges between 7 days to 10 years

Risk

Higher: Since ELSS are equity funds

The risk depends on the type of mutual fund

Compare ELSS Funds For Better Decision-Making!

Here is a table that compare ELSS funds when it comes to returns for a three-year period.

ELSS Fund Name

Daily AUM (Cr.)

NAV Direct

ROI 3 Year Direct (%)

ROI 3 Year Benchmark (%)

BOI AXA Tax Advantage Fund

544.48

113.89

29.67

19.02

Mirae Asset Tax Saver Fund

10544.55

33.83

24.95

18.84

Union Long-Term Equity

459.95

44.28

22.51

19.02

IDFC Tax Advantage (ELSS) Fund

3497.

106.39

22.87

19.02

So, Why Choose ELSS In 2024?

  • Selecting an ELSS long-term equity fund makes sense for a variety of reasons. These are the top 3 reasons, however, why investing in ELSS is the perfect choice if your only goal is to recover your funds.
  • It is important to remember that this is a mutual fund investment with a long-term equity investment mandate. This suggests that your portfolio will expand at a substantially faster rate than that of its competitors, which are debt-oriented.
  • ELSS is a qualified instrument under Section 80C of the Income Tax Act of India, which means that you would be eligible for a tax deduction of up to Rs. 1.5 lakhs from your taxable income.
  • With only a 3-year lock-in time, ELSS has the shortest lock-in duration of any tax-saving plan. In just three years, you will have realized the return on your investments and profits.

Among the many possibilities available, we will examine the best ELSS funds for 2021 investments. Our study has been grounded in the various market ranking approaches. It was observed that the majority of other ranking systems available in the market mostly rely on net asset value (NAV) for classification and categorization.

To Summarize

In summary, an ELSS differs from conventional equity mutual fund schemes primarily due to the tax savings and lock-in duration. ELSS is a better choice if you wish to invest in equity funds while saving money on taxes. Prior to making an investment, it is important to analyze the fund's growth potential, track record, asset allocation, risk-o-meter, relative size, and investment aim.

Team Sharekhan
by Team Sharekhan

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