Top Performing ELSS Mutual Funds for SIP Investments

Mutual funds, also known as Equity-Linked Savings Schemes (ELSS), are popular among investors who want to increase their wealth and save taxes because they provide tax advantages under Section 80C of the Income Tax Act. Because ELSS funds primary asset class is stocks, they have the potential to yield better returns than more conventional tax-saving options like NSC or PPF. They do, however, include some risk, just like any equity investments.

Why make an ELSS investment?

The tax savings are a primary incentive to invest in ELSS. Each financial year, your taxable income may be reduced by up to ₹1.5 lakh in tax deductions for ELSS investments. Furthermore, when compared to other tax-saving choices, which generally have a lock-in duration ranging from five to fifteen years, ELSS has the shortest lock-in period—just three years. This makes ELSS a more flexible option for people who wish to take advantage of the equity market benefits but only want to hold their money invested for a limited period of time.

How to choose the best ELSS fund

Choosing the best ELSS fund requires taking into account a number of variables, such as the fund manager's track record, expense ratio, and historical performance. The following are important things to remember:

Historical Performance:

Examine the fund's results for the previous three, five, and ten years. Longer-term consistency in performance is typically a sign of a dependable fund.

The expense ratio refers to the amount the fund charges you for investment management. You're getting more value out of your money when the expense ratio is lower.

Experience as a Fund Manager:

The success of the fund is significantly influenced by the fund manager's background and performance history. A seasoned manager with a strong record is frequently a better choice.

When building a portfolio, examine the industries and stocks that the fund has invested in. A portfolio that is well-diversified across multiple industries lowers risk and increases return possibilities.

Highest Returning ELSS Funds

Currently, a few of the best-performing ELSS funds are as follows:

Axis Long Term Equity Fund: Because of its steady performance, this fund has been a favorite among many investors.

The Mirae Asset Tax Saver Fund is a popular choice for investors seeking both cost effectiveness and growth due to its lower expense ratio and impressive returns.

Canara Robeco Equity Tax Saver: This fund is another strong candidate in the ELSS category, boasting a balanced portfolio and a strong track record of success.

The Invesco India Tax Plan is a fund that has consistently produced returns throughout the years by concentrating on businesses with solid fundamentals.

One of the best ways to reach your financial objectives and save taxes is to invest in ELSS funds. ELSS funds are a flexible investment choice that offer a short lock-in period and the possibility of substantial returns. Nonetheless, it's critical to select the best fund depending on your financial objectives, investing horizon, and risk tolerance. This allows you to optimize your returns and gradually accumulate a sizable corpus.