ELSS Funds for different Risk Profile

Match your Goals Risk Profile With ELSS Investment

DIFFERENT TRACKS Unlike funds with a clearly defined investment universe -- large-cap, mid-cap or multi-cap - Tax Saving Schemes do not specify investment focus

If you are looking for an equity Linked Savings Scheme (ELSS) to pare your tax burden, the plethora of options may confuse you. Many investors simply opt for ELSS funds, also called tax saving schemes with the best return over a certain time period. However, this may not yield the best results. There are several types of ELSS funds and it requires a nuanced approach to pick the right one.

DIFFERENT RISK PROFILES

Unlike funds with a clearly defined investment universe -- large-cap, midcap or even multi-cap schemes in the ELSS category do not specify their investment focus. While these schemes have the flexibility to invest anywhere, most tend to follow a defined template.

For instance, some funds take a distinct large-cap tilt with a limited exposure to mid or small-cap stocks. Others prefer a higher exposure to the small-cap basket, with a modest large cap exposure, mostly intended to ensure liquidity in the portfolio. Some maintain a balanced portfolio, while a few adopt a more fluid approach, changing the portfolio mix according to market circumstances.

This difference in investment focus is evident in the portfolio of ELSS schemes. While the median portfolio market capitalisation (average market cap of a company a fund invests in) for ELSS funds is around Rs 36,000 crore, there are schemes with average portfolio market cap as high as `87,500 crore and as low as `13,000 crore, highlighting the disparity in the portfolio construction across ELSS funds.

A differentiated approach to portfolio construction means that the risk profile of ELSS funds varies substantially across schemes. Fund selection, therefore, is critical. The choice of fund should ideally be based on your risk profile, and not purely on a fund's return profile.

Investors should identify the nature of underlying exposure of the ELSS funds to ensure that the scheme objectives are in line with their own requirements.

If you are looking for an aggressive tilt and higher alpha or excess returns and can stomach volatility, then a scheme with a clear mid-cap bias would suit you better. Funds like Reliance Tax Saver, Sundaram Tax Saver and IDBI Equity Advantage come under this category .

For those who prefer stability over alpha, funds with a conservative, large-cap orientation would be a better fit. Franklin India Taxshield, DHFL Pramerica Tax Savings and Edelweiss Tax Advantage comprise such funds. Schemes like Axis Long Term Equity, Birla Sun Life Tax Plan, ICICI Prudential Long Term Equity, among others, have a more balanced portfolio.

Identifying the investing focus can also help you zero in on an ELSS fund that best complements your equity fund portfolio. If your existing portfolio is heavy on large-cap funds, you may opt for a tax-saving fund that focuses on mid-caps. Investors need to assess the risk-adjusted performance of funds in this category. It is critical that investors understand the risk involved owing to the portfolio mix. Mid-caps can fetch far higher returns but can witness a sharp fall during a correction. Also, keep an eye on the expense ratio while selecting the fund. A high expense will eat into your returns over time.

Already INVESTED IN ELSS Funds? What Next

For existing investors, this may be a good time to review their investment and see if the fund merits a place in your portfolio.

Some investors have the habit of opting for a different ELSS fund every year. This is far from ideal. Since you would also be holding a few traditional diversified equity funds, having more ELSS funds will lead to an overlap in your portfolio.

Try to limit your ELSS investments to one or two schemes. A financial adviser would be best placed to guide you towards the right ELSS fund, after considering your existing investments and risk profile. Don't be in a hurry to redeem your investment after the mandatory three-year lock-in period. Experts suggest staying with the fund for as long as one can.

Also, tax saving should not be the sole criterion for picking an ELSS fund. These funds are also suited for wealth creation over a long term and patient investors can reap rewards by staying invested for a reasonable period.

Invest Rs 1,50,000 and Save Tax upto Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds

Top 10 Tax Saver Mutual Funds for 2017 - 2018

Best 10 ELSS Mutual Funds to invest in India for 2017

1. DSP BlackRock Tax Saver Fund

2. Invesco India Tax Plan

3. Tata India Tax Savings Fund

4. ICICI Prudential Long Term Equity Fund

5. Birla Sun Life Tax Relief 96

6. Franklin India TaxShield

7. Reliance Tax Saver (ELSS) Fund

8. BNP Paribas Long Term Equity Fund

9. Axis Tax Saver Fund

10. Birla Sun Life Tax Plan

Invest in Best Performing 2017 Tax Saver Mutual Funds Online

Invest Best Tax Saver Mutual Funds Online

Download Top Tax Saver Mutual Funds Application Forms

For further information contact SaveTaxGetRich on 94 8300 8300

------------------------------

Leave your comment with mail ID and we will answer them

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

Call us on 94 8300 8300

Mutual Fund Review: Taurus Tax Shield

Taurus Tax Shield has seen a turnaround in performance since 2007, but still remains a volatile offering… The fund has seen a turnaround in its performance since 2007 and has delivered impressively during market rallies since then. The portfolio is also more diversified. It contained its downfall to an average level in 2008 but is still one of the most volatile offerings in this category. Bold investors can look at this fund. Strategy The fund manager invests across the market capitalisation and sectors. The selection of stocks is made on the basis of long-term business prospects and value creation. Fund Insight Launched in March 1996, the fund was a laggard with just two annual outperformances. Concentrated stock bets and high exposure to mid and small caps led to it being hit harder during market downturns. The number of stocks in the portfolio never exceeded 20 and it was not rare to see the top 5 holdings account for around 60 per cent of the portfolio. After b...

AXIS Long Term Equity Fund - The Best Tax Saver Fund for 2016

AXIS Long Term Equity Fund - Invest Online History: The open ended mutual fund was launched on December 21 in the year 2009. It is benchmarked against BSE 200 and managed by the fund manager JINESH GOPANI. Initially the scheme was called as Axis tax saver fund but later it was renamed as Axis long term equity fund with effect from September 2, 2011. Nature of investment: As far as asset allocation is concerned, 97.52% of the stocks are equity and 0.02% is debt based. The primary focus of the fund is to invest in diversified equity stocks that have higher growth potential. Total asset size of the fund is in the tune of 4,996 CRORE as of June 30, 2015. Performance: The performance of the fund for one year, 3 years and 5 years are 23.6%, 29.9% and 19.1 respectively which are far greater than 6.4%, 14% and 5.6% benchmark figures. It has also preformed fairly well against SBI magnum Tax Gain (G) and HDFC tax saver (G). The growth comparison is enumerated below; ...

IDFC Classic Equity Fund

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India) IDFC Classic Equity Fund IDFC Classic Equity is a large-cap equity fund which currently has assets under management worth Rs. 158.52 crore. It was launched in August 2005. The fund is benchmarked against the BSE-200 Index. Performance YTD 1-Year 3-Year 5-Year Since Inception IDFC Classic Equity 0.93 26.61 6.30 1.01 11.65 BSE 200 1.52 17.31 6.00 1.99 12.98 All figures in % as on January 31, 2013; Returns above one-year in CAGR terms ...

Health insurance guide - Part I

Insurance, by definition, is morbid. What if I die suddenly? What if my home caught fire? What if I had to undergo expensive medical treatment? What if something that I thought happened only to others befell me? Insurers, who work with large samples, calculate the probability of such an event and, hence, the possibility of them having to pay out a sum of money to mitigate, to the extent possible, the effects of that disaster. However, the possibility of you undergoing some kind of expensive medical treatment during your lifetime is far more likely than you dying suddenly or your house burning down. Given that costs at private healthcare facilities, where you are most likely to land up, is high, and, doubling every four years 10 months or so, the rest of your money life could easily go out of whack if you had to incur such expenses. Just 12 per cent of India's population is covered with some sort of health insurance. Pared to the bone, for a comparatively small price, health insu...

Use Mutual Fund SWPs for getting fixed payments

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India) Investors time withdrawals optimally to save on tax The systematic withdrawal plan, or SWP, could be called the lesser known cousin of the much talked about and publicised systematic investment plan (SIP). There's yet another cousin — the Systematic Transfer Plan ( STP ). In SIP, you invest a fixed sum of money at regular intervals (monthly/ quarterly) to buy some units of a mutual fund scheme. In SWP, as the name suggests, you do the opposite: You redeem some mutual fund units from your portfolio to get a fixed sum of money at regular intervals (monthly/quarterly/half year/yearly). In SIP, you get a higher numbers of units when the markets are down, and lesser in a buoyant market. In SWP, going by the product logic, you redeem higher number of units when the markets are do...

Invest in Tax Saving Mutual Funds	Download Any Applications
Transact Mutual Funds Online	Invest Online
Buy Gold Mutual Funds	Invest Now

Invest in Tax Saving Mutual Funds	Download Any Applications
Transact Mutual Funds Online	Invest Online
Buy Gold Mutual Funds	Invest Now

Prajna Capital - An Investment Guide

Search This Blog