The best instrument to save tax along with creating wealth, are Equity Linked Saving Schemes also known as ELSS or Tax saving Mutual Funds. under section 80C, you can claim tax deduction up to Rs 1.5 lakh by investing in ELSS funds. ELSS are Equity based mutual funds which means they are good and capable to giving high returns over a long period of time.
The lock in period in an ELSS fund is of 3 years. the advantage of this is that the fund manager takes the best picks to invest and channelizes your investments for best returns.
Here are the 5 best ELSS funds for the year 2016 –
Axis Long Term Equity Fund – Axis Long Term Equity Funds have given the returns of 21.19% in a duration of 5 years and 23.12% returns in duration of 3 years. besides this, the fund has given returns of 17.61% per anum since inception. This fund primarily invests 70% of the corpus in Large Cap and the remaining 30% in mid and small cap. The fund basically looks and invests in companies which deliver high returns on investments and also have sustainable business models.
Birla Sun Life Tax Relief 96 – This fund was launched in 1996, making Birla Sun life Tax Relief 96 one of the oldest funds in the market. The fund has given 18.68 % returns for the duration of 5 years and 21.96% for a duration of 3 years. The returns from the fund since inception has been 9.54%. Financial, automobile, services, healthcare and FMCG are the top five sectors in which this fund invests. Around 60% of the corpus is invested in Large cap and the remaining 40% is invested in small and mid-Caps.
Reliance Tax Saver Fund – Reliance Tax Saver Fund has been on the list of top performing mutual funds in ELSS category. The fund has given 21.31% returns for a duration of 5 years and 27.99% for a duration of 3 years. Unlike any other Tax saving fund, Reliance Tax Saver Fund invests 60% of the corpus in mid and small cap sectors and the remaining 40% of the corpus in Large caps. The fund majorly invests in automobile and engineering sectors.
DSP BlackRock Tax Saver Fund – DSP BlackRock Tax Saver Fund has given a return of 20.09% for a duration of 5 years and 23.07% for a duration of 3 years. Financial, energy, healthcare, construction and automobile are the major sectors where DSP BR Tax saver fund invests.
Franklin India Tax Shield Fund – The fund was launched in the 1999. Franklin India Tax Shield Fund has given returns of 17.37% for a period of 5 years and 21.48% for a tenure of 3 years. The fund majorly invests in the Financial Sector, Automobile Sector and Healthcare. The fund allocates 75% of the corpus towards large cap making it a safe choice for the investors.
With the ability to save tax and create wealth at the same time, there is one more advantage of having an ELSS fund as compared to other tax saving instruments.
Advantages of ELSS over NSC and PPF
- Has a shorter lock in period – 3 years.
- Being and Equity oriented scheme, tends to give higher returns than NSC or PPF.
- Allows investors to opt for dividends letting them get some gains during the lock in period.
- Has the option of SIP – Systematic Investment Plan.
Looking at all the returns and the advantages of ELSS Tax saving Mutual Funds, we at ProsperX suggest you to start investing in ELSS funds now. Start now and create your wealth.
We at ProsperX wish all the best with your investments.
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