Lets explore the top 3 Tax Savings Funds in India and I have not selected Axis Long Term Equity Fund the only reason being fund has almost reached AUM of Rs 9291 Cr, the bigger the size of fund scheme bigger the problem of fund manager. Here is a post where in i have mentioned how large AUM impact the fund returns click here to read the post
Funds selected are on basis of
Alpha Ratio
Risk - Reward Ratio
Rolling Returns calculation for 3 years
Out-performance in SIP Returns for 5 Years
Out-performance in Lump Sum returns compared to benchmark for 5 years
Funds in existence from 2008 which has seen the bear phase of global recession and bull phase later
Funds AUM below 5000 Cr
Funds provided returns more than 15% CAGR
# 1 : Reliance Tax Saver Fund
The Fund has consistently outperformed its benchmark (S&P BSE 100) and the ELSS category across various times. The fund marginally under-performed the benchmark and the category during the bull phase of 2003 to 2007. It did picked up pace in December 2007 and thereafter consistently outperformed both the benchmark and the category across all market phases.
Performance : Lumpsum Rs 1,000 invested in the fund on 08/07/2011 would have grown to around Rs 21771 (XIRR return of 16.82 per cent) as on July 8th 2016. A similar investment in the benchmark would have grown to Rs 14881 (8.27 per cent).
A monthly systematic investment plan (SIP) of Rs 1,000 for a period of five years from 08/07/2011 to 08/07/2016 (on a principal of Rs 60,000) would grow to around Rs 101913, delivering an CAGR return of 16.9% per cent where as the same SIP in benchmark fund would grow to 78992 with a CAGR of 8.4%
# 2 : Franklin India Tax Shield Fund
Franklin India Tax Shield manages an AUM of 2146 Cr as on 30/05/2016. Fund is highly invested in Banks and Financial Services Stocks,Automobiles and technology. It should be a top choice for risk averse investors seeking ELSS benefits.
Performance : Lumpsum Rs 1,000 invested in the fund on 07/08/2011 would have grown to around Rs 2073 (XIRR 15.67%) as on July 8th 2016. A similar investment in the benchmark NIFTY 500 would have grown to Rs 1528 with a modest XIRR of 8.83%
A monthly systematic investment plan (SIP) of Rs 1,000 for a period of five years from 07/08/2011 to 07/07/2016 (on a principal of Rs 60,000) would grow to around Rs 97845, delivering an XIRR return of 19.6% per cent where as the same SIP in benchmark fund would grow to 82443 with a XIRR of 12.5%
It is from the above data we can clearly identify the fact that Franklin Tax Sheild fund has clearly outperformed benchmark NIFTY 500 in Lumpsum as well as SIP returns.
# 3 : Birla Sun Life Tax Saver Plan
After a bad patch from 2008-2010,Birla Sun Life Tax Plan has made a big comeback in the last five years, with a good run since 2014. If you check the rolling returns graph below, after 2014 fund has outperformed benchmark index S&P BSE Sensex. The fund's overweight positions in engineering and capital-goods majors has paid off in the first part of 2015. So did its underweight positions in financial services and energy.
Performance : Lumpsum Rs 1,000 invested in the fund on 07/08/2011 would have grown to around Rs 2170 (XIRR 17.06%) as on July 8th 2016. A similar investment in the benchmark Sensex would have grown to Rs 1602 with a XIRR of 10.06%
A monthly systematic investment plan (SIP) of Rs 1,000 for a period of five years from 07/08/2011 to 07/07/2016 (on a principal of Rs 60,000) would grow to around Rs 99318 with a XIRR returns of 20.2% and SIP of Rs 1000 for same period in benchmark BSE SENSEX would have grown to 76670 with a CAGR of 9.6%
If you would like a fund which has proved itself across not one but multiple market cycles, this one fits the bill.
Points to remember while investing in ELSS
Money invested in ELSS are directly related to stock market, risk is involved.
Subsequent investment is also locked for 3 years. For Example you invested via SIP on 01/06/2016 & 01/07/2016 then on 01/06/2019 your units purchased on 01/06/2016 will be available for redemption
And lastly, you should consider that you can’t reduce the impact of market fall, as you can’t switch or redeem investment before 3 years
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