Top 10 ELSS Mutual Funds To Invest In 2021-2022
Shrijan, a regular employee working in the production branch of Tata Motors, was the only earning member in his family. He belonged to a middle-class family comprising his father, a retired Army man, his mother, a housewife, and his newly wedded wife, who helps her mother in house chaos. The family’s financial condition was well enough to satisfy all their needs until Shrijan met a car accident.
The accident changed the entire fate of the whole family, as the only source of income of their family got hospitalized for several days, and the few savings they had all went into his treatment. In such a financial crisis, it was the first time the family got financial guidance from some in the hospital and learned about Equity Linked saving schemes (ELLS). They came to know that ELLS mutual funds provide with best investment options and are preferred by most people because of their tax-saving facilities.
What are ELSS Mutual Funds?
ELSS stands for Equity Saving Schemes. The ELSS scheme mutual funds are the mutual funds that are tax saving in nature and are equity-oriented. According to the regulations issued by SBI, ELSS funds need to invest at least 80% of their corpus in equity or equity-related instruments. The main characteristics of these funds comprise a lock-in period for 3 years and qualification for tax deduction under Section 80C. In ELLs, an investment of INR 1.5 in every financial year is said to be a tax deduction under this section.
Top 10 ELSS Mutual Funds
- Axis long term equity fund
- Mirae Asset Tax Saver fund
- Invesco India Tax Plan
- Aditya Birla Sun Tax Relief
- DSP tax saver
- Kotak Tax Saver
- ICICI Prudential Long Term Equity Fund
- Motilal Oswal Long Term Equity
- Tata India Tax Savings
- Nippon India Tax
To make you familiar with different mutual fund schemes, the top 10 ELSS mutual funds are listed below:
1. Axis long term equity fund:
This is one of the best ELSS funds 2021, which is characterized to invest in a business with a long-term approach. This Equity fund uses a bottom-up approach for picking up the stock. Moreover, it uses a research process based on fundamentals to analyze the growth potential of the stocks with a strong business model. It has Sustainable competitive advantages over its other competitors. This way, it turns out to be the best ELSS funds option to invest in.
2. Mirae Asset Tax Saver fund:
This is one of the best ELSS funds options in 2021. The main aim of this mutual fund is to build a diversified portfolio of companies showing strong growth at a reasonable price across market capitalization, themes, and the style of investment. This ELSS fund also aims to invest in a large base of stocks to avoid concentration risks. Moreover, it is best ELSS funds 2021 as it prefers companies with high return ratios, robust business models, and sustainable competitive advantages over their competitors.
3. Invesco India Tax Plan:
The feature characterizes this plan to invest across market capitalization and sectors with a long-term perspective. Moreover, this is considered the best ELSS funds in 2021, as it prefers companies grow their businesses on a profitable and sustainable basis and are available at a reasonable price. Furthermore, the plan uses capitalization bias, stock selection, and sector allocation to generate alpha.
4. Aditya Birla Sun Tax Relief:
This scheme comes under the top 10 ELSS mutual funds and is characterized to use s combination of bottom-up and top-down approaches to select stock. The top-down approach helps analyze changing economic trends, key policy changes, macroeconomics, and many other things. In contrast, there is a need to identify companies with strong competitive businesses in good business and stable management in the bottom-up approach.
5. DSP tax saver:
This scheme uses a multi-purpose strategy for investing with a longer investment plan. The plan is considered under the top 10 ELSS mutual funds, and it uses a combination of top-down and bottom-up stock selection approaches. Moreover, the scheme uses blended analysis of valuation support and growth drivers for selecting a stock. The scheme constantly monitors prospects and price targets for deciding on investment in the future.
6. Kotak Tax Saver:
Offering the best ELSS funds 2021, the Kotak Tax Saver scheme uses a bottom-up approach to select stock across market capitalization. It is characterized by the feature to invest in stocks priced at a material discount to their intrinsic value. It also prefers companies that use strategies to build strong brands and franchises.
7. ICICI Prudential Long Term Equity Fund:
This equity fund comes under the top 10 ELSS mutual funds, and the key features of the scheme include a selection of stocks with a long-term view. Moreover, the scheme is characterized to follow a value-based approach during stock selection. Furthermore, the scheme focuses on the fundamentals of companies’ business, quality of management, financial strength, key earning drives, and industry structure during stock selection.
8. Motilal Oswal Long Term Equity:
Making its place in the top 10 ELSS mutual funds, Motilal Oswal Long Term Equity is characterized to follow an investment style and philosophy based on the ‘ Buy Right: Sit Tight’ principle. In this saying, Buy Right indicates buying the quality stock at a reasonable price, and sitting tight refers to remaining invested for a longer time. The scheme follows a bottom-up approach for selecting the stock. The scheme believes inadequate diversification with less number of stocks.
9. Tata India Tax Savings:
With an approach that focuses on the all-around growth and value assessment of investment, the policy is best ELSS funds 2021, a worth grabbing opportunity for people seeking stock selection. The art of stock selection focuses on research attributes that play an important role in the policy. Research is fundamental to saving financial resources, and the mentioned policy has developed a 5 point criteria to assess the same.
10. Nippon India Tax:
The policy is best ELSS funds 2021 and mainly applies the concepts of market trends and prospects of a business while selecting investment companies. For instance, it mainly approaches businesses likely to grow in the next two to three years. This not only reduces the risk factor but also enhances the profits that are generated over time.
What are the tips one must remember before investing?
Compare the past performance of 3, 5, and 7 years while making fund selection.
Don't wait for the last quarter or month of the financial year to invest in ELSS.
Don’t opt for the dividend option.
Opt for a direct plan for higher returns.
Why should one invest in an ELSS fund for saving tax?
One is advised to invest in ELSS funds to get higher returns, take advantage of the shortest lock-in period, and get many other benefits.