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Tax Saving Mutual Funds: 11 Best ELSS Funds To Invest [2019]

tax saving mutual funds elss

Are you hunting for best tax saving mutual funds or ELSS funds to invest in 2019? Investing in tax saver ELSS funds allows you to save tax under Section 80C.

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Investment in tax saving mutual funds helps you to get a deduction of up to Rs. 1.5 Lakh in a financial year. Apart from tax benefits, ELSS funds also have the potential to offer you awesome returns over a long-term period.

However, an equity-linked saving scheme carries significant risk and so think before you invest in it. You need to know the best ELSS funds to invest in 2019.

Key Takeaways of Tax Saving Mutual Funds – ELSS

ELSS funds are tax saving mutual funds, in which the majority of the funds are invested in equity schemes.

An equity-linked saving scheme lets you save taxes up to Rs. 46,800 in a financial year. You may also get the highest returns if you compared with any other Section 80C options. Moreover, your investment time horizon or lock-in period is of 3 years only.

You can also have the option to invest monthly as SIP in ELSS tax saving mutual funds. Moreover, you can invest with a very low capital as well as per your requirement.

Having said that, if you are willing to take the risk then start investing in ELSS mutual funds to reap the awesome benefits.

ELSS Mutual Funds or Other Tax Saving Options

You may find many tax savings plans like Bank Fixed Deposit, Public Provident Fund, National Pension System, National Savings Certificate, and others.

These tax saving investments also provide you with good returns as well. However, ELSS tax saving mutual funds is one of the best in terms of returns.

Moreover, its lock-in period is also the lowest among all tax saving funds. So, equity-linked saving scheme returns higher and partially taxable.

You need to pay a tax of 10% on gains over 1 lakh rupees as ELSS funds are treated as a long-term investment.

You can expect around 15% – 18% in a tax saver ELSS fund. With ELSS mutual funds, you will get the dual benefit of saving on taxes and a higher return on investment.

Here is the quick comparison between Bank FD, PPF, NSC, NPS, and ELSS Funds.

comparison tax saving mutual funds and other schemes

Advantages and Disadvantages of ELSS

ELSS tax saving mutual funds are risky to invest as these are equity-based instruments. So, you must invest in it for a longer period.

Apart from that, you can also opt for Fixed Deposit, PPF, and other low-risk tax savings investments products. However, if you just started your career, then you can go for ELSS mutual funds to get higher returns.

Key benefits for you is that the lock-in period is only 3 years which is lowest as compared to other mutual funds or tax saving scheme.

You may have the opportunity to earn high returns and you don’t have any maximum limit to invest as well. However, your earnings are taxed and that is also very low of 10%.

ELSS mutual funds are managed by experienced fund managers. So you don’t need to know how the stock market works.

Apart from the above advantages of ELSS funds, there are some disadvantages as well. Equity-linked saving schemes carry risk like any other mutual funds.

If you invest for a longer period, only then you can expect a good return. So, be prepared to invest in ELSS funds for at least 5 years or more.

11 Best ELSS Mutual Funds To Invest

Here is the list of top ELSS funds that you can consider to invest in 2019. Although selecting a fund require you to analyze many parameters.

Moreover, it also depends on your risk appetite, financial goals, and other financial objectives.

While selecting a fund, you need to analyze different parameters and then invest in a suitable one. Also, investing depends on an individual’s financial goals, investment horizon, and risk appetite.

I list out these funds based on their past performance and CRISIL ranking. All values are as on 20 February 2019 and so check the latest data before you invest.

Sl No ELSS Tax Saving Mutual Funds Crisil Rank 1Y Return  2Y Return  3Y Return   5Y Return 
1 Axis Long Term Equity – Direct (G) Rank 1 0.8 11.9 14.4 20.1
2 ABSL Tax Relief ’96-Direct (G) Rank 2 -4 11.7 15.7 19.9
3 Invesco India Tax Plan – DP (G) Rank 2 -1.2 10.8 16.2 19.3
4 ABSL Tax Relief ’96 (G) Rank 2 -5 10.5 14.5 18.8
5 Axis Long Term Equity Fund (G) Rank 1 -0.2 10.8 13.2 18.7
6 JM Tax Gain Fund -Direct (G) Rank 3 -4.3 9.1 16.8 18.7
7 IDBI Equity Advantage -Direct (G) Rank 3 -6 7.8 11.1 18.7
8 DSP Tax Saver Fund – Direct (G) Rank 3 -6.6 5.8 15.5 17.9
9 Invesco India Tax Plan (G) Rank 2 -2.7 9.1 14.4 17.4
10 IDBI Equity Advantage – Reg (G) Rank 3 -7.6 5.9 9.5 17.3
11 JM Tax Gain Fund (G) Rank 3 -5 8.2 15.3 17.1

So those are the best performing ELSS tax saving mutual funds.

Anything I Missed?

And now I’d like to hear from you.

Are there any other ELSS funds that you think may outperform in the future which you didn’t see on this list?

Or maybe you have a question.

Either way, let me know by leaving a comment below right now.


Published on: February 21, 2019

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