Top Performing ELSS Mutual Funds to Invest in 2020
ELSS Funds are mutual funds that invest across different market capitalization categories. What makes these funds different from multi cap funds is that investments upto Rs. 1,50,000 in ELSS is eligible for deduction from taxable income under section 80C of the Income Tax Act.
Market Capitalization is defined as the market value of all outstanding shares and is achieved by multiplying the total number of shares outstanding by the market price per share.
Some of the characteristics of a ELSS Mutual fund are as follows:
- They provide a diversification since they invest across large caps, mid caps and small caps
- Lower expected volatility
- Suitable for investors with medium risk appetite
- Highly suitable for clients looking to invest in tax saving options
- They have a lock-in period of 3 years
- Fund manager has the leeway to increase allocation to a particular category based on market view
The following are the top-rated ELSS mutual funds as per ZFunds scoring for the quarter ended June 2020. The funds with the highest ZF Score (refer methodology here) are ranked at the top. The complete list of funds can be seen in the Annexure at the end of this article.
1. Axis Long Term Equity Fund
A Top-performing fund, Axis Long term equity fund has consistently outperformed its benchmark as well as the category average returns in the last 10 years with significant margins.
The fund has been ranked at this position due to its highest scores in metrics like Performance against benchmark, Capture ratio, Risk-adjusted score & Consistency as per ZFunds Ratings.
Axis Long Term Equity Fund is an excellent choice in the ELSS category given its consistency & management of downside risks.
- Rs. 10,000 invested in August 2015 would have been approx. Rs.14,189.
- Rs. 1,000 invested in monthly SIP since September 2015 would have been approx. Rs. 73,003.
Also Read: ICICI Prudential Freedom SIP
2. Tata India Tax Savings Fund
Though not a consistent performer, the Tata India tax savings fund has managed to beat the returns of its benchmark & category average returns over longer periods with decent margins. What takes it to the top of ZFunds Ratings is its high score in metrics of consistency (on the basis of alpha generation in the last 5 years) & capture ratio i.e fund’s performance relative to its benchmark in upward & downward trending markets.
The fund has also scored decently in terms of valuations.
Tata India Tax Savings Fund is a good choice in the category with the perspective of long term investment for higher returns.
- Rs. 10,000 invested in August 2015 would have been approx. Rs.14,400.
- Rs. 1,000 invested in monthly SIP since September 2015 would have been approx. Rs. 69,196.
3. Kotak Taxsaver Fund
A fund which has not been a consistent performer. However, the Kotak Taxsaver Fund has the ability to beat the returns of its benchmark & ELSS category averages over the long horizons i.e of more than 7 years.
The Fund has one of the highest scores in the metrics of consistency (of generating alpha in the last 5 years) & concentration in the ELSS fund category. Also, it has one of the highest scores in the very important parameter of volatility, thereby taking the fund into Top 3 ELSS Funds as per ZFunds Ratings.
Kotak Taxsaver Fund is an ideal Tax saving fund for a long term investment.
- Rs. 10,000 invested in August 2015 would have been approx. Rs.13,700.
- Rs. 1,000 invested in monthly SIP since September 2015 would have been approx. Rs. 69,643.
Updated Date: August 30, 2020