2020 was truly a grand year in itself. Apart from the pandemic in itself, it also taught us some very important lessons when it comes to financial management. A crisis can probably never be predicted. But it can be prepared for.
In light of this thought, almost all of our reserve funds have been depleted in the past year. It is upon us to recover whatever we have lost within 2021. And to do that, the most advantageous and strategic instrument to invest in would be investing in long term equity fund ELSS (Equity Linked Savings Schemes).
ELSS is a type of mutual fund. For a refresher, mutual fund investments are where a professional fund manager with impeccable experience is hired by the company to maximize profits by investing in instruments of equity/debt.
You as a customer invest money in the entire pool, and the fund manager invests that entire sum across multiple stocks listed on the exchanges. Out of whatever money is made, you get your share depending on how much you had invested originally.
So Why Go For ELSS in 2021 ?
There are many reasons to choose a long term equity fund ELSS. But with the sole point of recovering your savings, there are the top 3 reasons why choosing ELSS is the right call for investing.
1. First and foremost, it is a mutual fund investment with a mandate to invest in equities for the long term. This implies that the rate of growth of your portfolio will be significantly higher than their debt-oriented counterparts.
2. As per Section 80C of the Income Tax Act of India, ELSS is an eligible instrument, implying that you will be receiving a tax deduction ranging to a maximum of Rs. 1.5 lakhs from your taxable income.
3. ELSS boasts the lowest lock-in periods of all tax saving schemes at just 3 years. So you will have harvested your investments and your gains in just 3 years.
Among the plethora of options to choose from, we will take a look at the top ELSS funds to invest in 2021. We have based our research on the different ranking methodologies in the market. We noted that almost all other ranking systems in the market are based purely on categorising and classifying mainly on the basis of NAV(Net Asset Value).
For this analysis, we also included variables based on the performance of the funds and their relative market ranking, apart from basing it only on NAV and AUM. This helped us compile the most effective list of ELSS funds to invest in 2021.
a) Return On Funds
Compares the fund in question with all the funds in the market to give you a fund return in percentage. This helps in understanding the performance consistency and history of the fund, and how much returns can we expect from the fund.
b) Fund Performance History
Compares the current year’s performance with that of the previous 3 years, 5 years, and 10 years. This will enable you to make an informed decision on what to invest in based on how long you wish to stay invested in the instrument.
c) Expense Ratio
This value depicts the ratio or percentage of your investment that goes into maintaining the resource pool. A lower number means that a lesser ratio of the money goes into maintaining the fund, hence you take away more money from it.
d) Financial Parameters
There are other statistical and financial parameters that are also at work here such as Sortino Ratio, Sharpe Ratio, Standard Deviation, Alpha, Beta, and other risk based quants.
While analyzing the different funds, we realized that the other ranking scores have been insufficient because the investment period remained non-deterministic. To solve that issue, we have compiled two lists that will help you identify which plan is more suitable for your needs.
ELSS Funds 2021 for 3 Years of Investment, as of March 09, 2021
The first top 10 ELSS funds list talks about the top 10 ELSS funds with the best returns after a period of 3 years. This list is ideal for those who wish to have their investing period be 3 years.
|Fund Name||6 month||1 year||3 year|
|Equity Tax Saver Growth – Canara Robeco||35.24||33.25||17.77|
|Tax Saver Fund – Mirae Asset – Regular Growth||35.4||36.72||16.49|
|Long Term Equity Fund – Axis Growth||29.84||22.02||15.05|
|Tax Saver Fund – Kotak Growth||31.77||24.1||13.18|
|Tax Saver Fund Growth – DSP Growth||34.16||29.4||13|
|Long Term Equity Fund (Tax Saving) – ICICI Prudential Growth||33.4||29.62||11.91|
|Long Term Equity Fund – UTI Regular Growth||31.59||27.49||11.63|
|Long Term Equity Scheme – SBI Magnum Regular Growth||28.59||29.87||8.95|
|Long Term Equity – Edelweiss Growth||29.87||22.44||8.67|
|Tax Relief 96 – Aditya Birla Sun Life Growth||22.53||21.38||8.65|
Best ELSS Funds 2021 for 5 Years of Investment, as of March 09, 2021
The second top 10 ELSS funds list talks about the top 10 ELSS funds with the best returns after a period of 5 years. This list is ideal for those who wish to have their investing period be 5 years.
|Fund Name||6 month||1 year||5 year|
|Equity Tax Saver Growth – Canara Robeco||35.25||33.26||17.78|
|Tax Saver Fund – Mirae Asset – Regular Growth||35.41||36.73||16.5|
|Long Term Equity Fund – Axis Growth||29.85||22.03||15.06|
|Tax Saver Fund – Kotak Growth||31.78||24.11||13.19|
|Tax Saver Fund Growth – DSP Growth||34.17||29.41||13.01|
|Long Term Equity Fund (Tax Saving) – ICICI Prudential Growth||33.41||29.63||11.92|
|Long Term Equity Fund – UTI Regular Growth||31.6||27.5||11.64|
|Long Term Equity Scheme – SBI Magnum Regular Growth||28.6||29.88||8.96|
|Long Term Equity – Edelweiss Growth||29.88||22.45||8.68|
|Tax Relief 96 – Aditya Birla Sun Life Growth||22.54||21.39||8.66|
The insights provided by this study aims to help you make an informed decision on your investment plans so that you can maximize profits from your portfolio.