We present the best tax saving mutual funds (ELSS) to invest in India. Investing your hard earned money to save income tax is a critical part of your financial planning. While one could use any of the existing 80C deductions to save income tax, using tax saving mutual funds, also called Equity Linked Saving Schemes (ELSS) for the same purpose offers the twin advantage of saving tax and making your money grow.
You need to be aware of the fact that ELSS have a lock in period of 3 years. So if you put in your money now, it cannot be redeemed before 3 years. Also, past performance of a mutual fund is not guaranteed in the future. However, historical performance is a very critical factor to assess the performance of a ELSS.
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Fidelity Tax Advantage
Fidelity tax advantage is one of the few ELSS that have a large cap tilt. What that means is that it offers investors a cushion when markets take a dip. Using a bottom up stock picking strategy, Fidelity tax advantage has performed well since its launch in 2006. It has weathered the stock market storm for many years now to establish its supremacy with a low risk and high return promise.
| Returns in % | ||||
| Fidelity Tax Advantage | Since Launch | 5 yr | 3 yrs | 1 yr |
| Fund | 15.97 | 13.45 | 10.68 | 11.77 |
| Category | – | 6.2 | 2.9 | 3.94 |
DSP BlackRock Tax Saver Fund
Benchmarked against S&P CNX 500, DSPBR tax saver fund opts for an average risk profile with an average rate of return. In existence for 5.5 years till now, the fund has taken a large cap bias. This offers tremendous stability and to the portfolio and will reap rich benefits in stock market rallies. The fund uses a multi-cap strategy and ensures an average holding of around 5% in a stock. DSPBR tax saver fund can be a good bet for an investor looking to take the large cap growth route to making money.
| Returns in % | ||||
| DSPBR Tax Saver Fund | Since Launch | 5 yr | 3 yrs | 1 yr |
| Fund | 12.60 | – | 5.78 | 4.61 |
| Category | – | 6.2 | 2.91 | 3.94 |
HDFC Taxsaver
This probably is one of the most famous tax saving mutual funds. Established in 1996, it has beaten its peers almost each year. You seldom get a mutual fund with a history of 14 years with consistent performance. HDFC Taxsaver does not limit its investment across any sector or even market capitalization. With a above average return performance with low risk, HDFC Taxsaver is a very safe mutual fund. It is benchmarked against S&P CNX 500 and has net assets of around 2800 crores.
| Returns in % | ||||
| HDFC Taxsaver | Since Launch | 5 yr | 3 yrs | 1 yr |
| Fund | 33.12 | 9.47 | 12.53 | 10.67 |
| Category | – | 6.2 | 2.91 | 3.94 |
Religare Tax Plan
Benchmarked against BSE 100, Religare tax plan has been in existence for 4.5 years as of today. It boasts of high returns with average risks, this is only helped by a small asset base of 100 crores which is easy to manage by the fund managers. Its top 3 sectors account for nearly 45% of its portfolio while the top 5 holdings occupy around 20%. Religare tax plan uses a bottom up stock picking strategy and maintains a portfolio of around 25 to 50 stocks with restriction to a single stock at 5-6%.
| Returns in % | ||||
| Religare Tax Plan | Since Launch | 5 yr | 3 yrs | 1 yr |
| Fund | 13.39 | – | 10.04 | 8.41 |
| Category | – | 6.2 | 2.91 | 3.94 |
Sundaram Taxsaver
This one is another long term existing ELSS with a ten year history of great performance. With net assets of 1440 crores and a average risk return profile, Sundaram Taxsaver has been a favourite among investors consistently. It has a large cap tilt with nearly 70% of its portfolio in large caps with the top 3 sectors accounting for nearly 55% of the portfolio while the top 5 holdings account for 20%. A must have for investors looking to save tax.
| Returns in % | ||||
| Sundaram Taxsaver | Since Launch | 5 yr | 3 yrs | 1 yr |
| Fund | 20.37 | 8.89 | 4.59 | 0.84 |
| Category | – | 6.2 | 2.91 | 3.94 |
More funds
Apart from the above 5, the following tax saving mutual funds of 2011 are also performing great and they deserve your attention.
| Fund Name | Lanuch Date | Risk | Return |
| Fidelity Tax Advantage | Jan-06 | Low | High |
| Canara Robeco Equity Tax Saver | Mar-93 | Below Average | High |
| Taurus Tax Shield | Mar-96 | Above Average | Above Average |
| Sahara Tax Gain | Mar-97 | Average | Above Average |
| Reliance Tax Saver | Aug-05 | Below Average | Above Average |
| HSBC Tax Saver Equity | Dec-06 | Low | Average |
| Franklin India Taxshield | Apr-99 | Low | Above Average |
| Tata Tax Saving | Mar-96 | Average | Average |
| Principal Personal Tax Saver | Mar-96 | Above Average | Average |
| Magnum Taxgain | Mar-93 | Average | Average |
| L&T Tax Saver | Oct-05 | Above Average | Average |
| ICICI Prudential Tax Plan | Aug-99 | Average | Above Average |
| HDFC LT Advantage | Dec-00 | Below Average | Average |
| Birla Sun Life Tax Plan | Feb-99 | Average | Average |
Pick any and make money. Happy investing !
Please be specific. Which one is your personall favourite ?
@rajiv, None. I don’t have a MF which is my personal fav. There are too many out there to compete !
Thanks a ton Radhey for this article, though still I didn’t read fully.
Going to read this soon. One good thing is, have just applied for Fidelity very recently :). Once again thanks for fulfilling my wish.
@Chirag, Great Chirag. You seem to be a knowledgeable investor.
@Radhey Sharma, Thanks Radhey. Just doing my bit, just know some small things in this big area :). Improving self knowledge by reading, your artile also helps a lot.
In future, planning to hire a good financial advisor once I have considerable amount to invest in, may be a few years down the line :).
Nicely written on the best tax saving mutual funds of 2011. To get the top 5 of 2011, you can visit this page
Sir,
Can u advise me the higher return MF which are covered under 80C for tax benefit purpose.can invest between 40000 to 50000/-
@Samina, Read : https://www.thewealthwisher.com/2011/05/06/best-tax-saving-mutual-funds-elss-of-2011-in-india/
Hi Radhey,
One of my relatives has a lump sum amount of 17 lakhs plus to invest – he is not keen on real estate – any suggestions as to where to invest ?
@Sasmita, This can’t be commented as we need to know for how long can he lock in the money – what does he want to save for – how much risk can he take – what his current asset allocation is and much more.
If you provide these details, I might be able to help.
Ok thanks Radhey, i will pass on the info, he can try answer these questions directly as I do not have all these details about my cousin.
Hello sir,
Can you please tell me aboutn Axis Tax saver?
Br,
Binu
@Binu, Sorry what do you want to know about it ?
Hello sir,
I want to know abt Axis Tax saver plan which is lunched in 2010 .
Is it a good tax saver plan . can we invest in it?
Br,
Binu
@Binu, There are better ones around, this is just 1 year old. Pick one which has tested the ups and downs of the stock market.
You can also check for Quantum Tax Saver; which follows sound research process and have been doing well in ups and down of stock market.
Dear sir,
I am 33 old and want to invest Rs 5000 per month in MF by SIP only 5years. PLEASE sggest 3-4 best funds as per thier allocation. which funds to choose growth or debt? low risk
Your reply received but not clear please suggest the step by step
thanks
regards
shailesh
Here is the new reply:
my goal is very clear i want to get minimum 50000 per month after 15years how much should i invest through sip per month and my age is 30yrs after completed the 15yrs what are the lumpsum amount i get totally transfer to annuity. iam not interested in insurance plan. suggest the mutual funds which given best returns.
@shailesh kumar, Go with any from the list you saw earlier.Go with equity funds. You need a mix and match of everything.
hi all,
i am new to this,
i want to invest 30k to 50k in this month to save my tax.
please sujjest me any good mf.
@niteen, read the best tax saving ELSS funds on this blog. Search at Archives.
Can the Sum invested in Axis Tax Saver Fund be redeemed within lockin period of 3 years, in any case
@Prateek, No, it cannot.
Hi Radhey,
I wish to start with the SIP. As I am planning for Higher studies abroad. I will be doing my job for next 1 year. Can you help me with it?
@Sarang Metkar, What do want to save for with this SIP Sarang ? When do you need the money ?
i am 29 year old and want to invest 15000 per month in mutual funds for 15 years as i wanna retire by the age of 45, can you please advise me where to invest
Nishant, you should invest in diversified equity MFs and PPF to start with.
@Nishant,
Good that you have planned out how much you need for retirement. For choice of MF you can go through the below links –
https://www.thewealthwisher.com/2012/01/11/4-best-large-and-midcap-mutual-funds-to-invest-in-2012-in-india/
https://www.thewealthwisher.com/2012/01/13/best-mid-cap-small-cap-multi-cap-mutual-funds-to-invest-in-2012-in-india/
@Nishant,
Make sure to spend more time here and go through various articles which Radhey has written and I am sure you will be benefited. It will help you streamline your financial goals. I have been benefited a lot from Radhey’s articles and I keep coming back for more.
Hi Radhey Sharma my goal is i want to get minimum 50000 per month after 15years how much should i invest through sip per month and my age is 30yrs after completed the 15yrs what are the lumpsum amount i get suggest the best mutual funds which give best returns
I suggest you read this article: –
https://www.thewealthwisher.com/2010/12/06/how-much-money-do-you-need-to-retire/
@Pavan,
After reading the article suggested by Vivek, you can look at below articles for choice of MF. Please spend time here and go through various articles which Radhey has written and I am sure you will be benefited. Of course I have.
https://www.thewealthwisher.com/2012/01/11/4-best-large-and-midcap-mutual-funds-to-invest-in-2012-in-india/
https://www.thewealthwisher.com/2012/01/13/best-mid-cap-small-cap-multi-cap-mutual-funds-to-invest-in-2012-in-india/