Are you looking for saving tax (under IT section 80C)? And also want good returns on money invested? Well, no doubt there are many options available to save money under section 80C (up to 1.5lac) but nothing can beat ELSS Tax saving mutual funds of 2018 which can give you around 30% return yearly. ELSS mutual funds are best to invest in 2018 and to get good returns in 3 years. Here we are listing some of the Best ELSS tax saving Mutual Funds for you, which you can add in your portfolio.
Top 5 Best ELSS Tax Saving Mutual Funds of 2018
Below are the top elss funds of 2018 which can save your tax or say help you in tax planning by saving tax and also help you to make 30% return annually;
|Sr No.||ELSS Tax Saving Mutual Funds||Inception||Last Year Return||Last 5 Years Return||Fund Return Grade|
|#1||DSP Blackrock Tax Saver Fund||2007||36%||20.7%||High|
|#2||Birla Sun Life Tax Relief 96||1996||43.1%||22%||Abv Avg|
|#3||Axis Long Term Equity Fund||2009||38.7%||22%||High|
|#4||L&T Tax Advantage Fund||2013||42.7%||20.8%||Abv Avg|
|#5||Franklin India Taxshield Fund||1999||30.3%||19.4%||Average|
As you can see, DSP blackrock, birla sun life, axis long term, L&T tax advantage are some of the best elss fund got listed in our list of best. Now before we explain why we choose them, let us clarify about ELSS funds, how it works for those who don’t know about it.
What is ELSS Fund & Why you should invest in this?
Like all other mutual funds, ELSS (Equity Linked Savings Scheme) is also a type of mutual fund, in which your money goes to the funds which saves your tax. It helps you to make money as well as to save much of your tax money.
There are many ELSS mutual fund brands available who re-invest your money in different sectors but we have picked those who is going to outnumber all other portfolios (based on our research). There are some reasons why we recommend you to invest in ELSS funds not in any other tax saving options for 80C Section.
ELSS Proved to be Best Tax saving Option
Government of India allows special provision for tax payer under Income Tax Section 80C where tax payer can invest up to Rs.1.50 L (as on 10th Jan, 2018) in one financial year. You can save in Bank Fixed deposit, National Saving Certificate (NSC), PPF or ELSS mutual fund.
But ELSS is the only option which has only 3 years lock in Period (you can not withdraw money for lock in period), while all other option like PPF or NSC is having minimum 5 years of lock in period. If we just look at the last 5 years of returns and lock in period, ELSS Mutual funds beaten all other in terms of return and also it has the lowest lock in period as well.
Apart from Tax saving benefit, ELSS funds fall in EEE Rule which is Exempt – Exempt – Exempt, which means the money you earn from ELSS Mutual fund is also tax free, No tax to be paid on withdrawal, accumulation or on contribution. After PPF and Provident Fund, this is the only option which falls in EEE.
No Upper Limit
There is no upper limit to invest in ELSS fund but only RS.1.5 Lac limit is give for 80C tax exemption. So, if you want to enjoy inflation beating return with tax benefit and EEE treatment, you can start investing in ELSS Funds in Lumsum amount or even can start SIP as well.
How to Select the Best ELSS tax saving mutual fund?
Though this rules are followed by us to select this list, buy you can also find and select the best elss funds based on this topics. Just go through the below list of topics which you need to take care while selecting new funds.
- Beta: – The beta ration should be as low as possible in your fund.
- Alpha: – The higher it is, better for your fund.
- Sharpe Ratio: – we recommended fund with higher Sharpe ration.
- Standard Deviation: – Lower the SD, better return promised.
- R-squared Ratio (R2):- Lower, the better.
- Capture Ratio: – Above one capture ratio is good for fund.
Why we choose these 5 ELSS Funds only?
There is reason for choosing this 5 only and not any other ELSS Funds among the list of funds. One by one we try to elaborate to you why we chose this only.
Note :- All fund return data is based on “Direct Growth” option only.
#1 DSP Blackrock Tax Saver Fund
If you check the return of this fund since the starting, this fund has given consistent return above 25% or so. In 2017, the annual return is almost 36% which is quite good. Apart from if you look at the portfolio of this fund, it is well diversified in Banking, oil & Gas, Automotive and Cement sector.
#2 Birla Sun Life Tax Relief 96
Since 1996, this fund is giving tough competition to all other funds due to its portfolio holding in Automotive, Banking, Pharma, and telecom shares. Birla Sun Life Tax Relief 96 has given 43% of annual return last year and for last 5 years it has given 22% of return. This fund is continuously giving good returns year after year.
#3 Axis Long Term Equity Fund
This one is our personal favourite and given almost 38% return in last year. The most of the fund of axis long term equity fund is holding on automotive sector, banking sector, chemicals and engineering. In last 5 years, Axis long term equity fund has given 24.3 % return.
#4 L&T Tax Advantage Fund
As you can see, the L&T is holding most of the government projects, which reflects in their portfolio as well. This fund is holding most from Engineering, Real estate, Banking and Cement sector which is going to boom in next 2 years. 42.7% return has been given by this fund in last year and 20.8% in last 5 years.
#5 Franklin India Taxshield Fund
Franklin ELSS fund is holding on Banking, technology, automotive, and Oil & Gas sectors. 30.3 % return in last year and 19.4 % return in last 5 year is what it makes it in our list of best ELSS funds of 2018.
These are the Top 5 Best ELSS Tax Saving Mutual Funds of 2018 which are going to give you best return in next financial year. Make sure you invest in those funds before 31st March, 2018 to get benefits of tax exemption in current financial year.
Should we Invest in Regular Dividend or Regular Growth OR Direct dividend or Direct Growth?
For any mutual fund investment, you will get 4 options to invest in, as mentioned above. First of all we understand the Regular and Direct difference, Regular means where you get some advice from some fund manager or marketing executive (he/she will get share few % from your return, say 1%) while in direct, no one gets anything but you. As Direct means you only studied the fund and decided to invest. So, always go with direct option.
While for payout, you gets two options again, dividend or growth, if you want yearly dividend, you can selection that option and if you want that your dividend too get re-invested, select Growth option. We highly recommend you to go with Direct Growth, it is best. We will post new article on that to explain you in detail.
These are the ELSS Funds, Tax Saving Mutual Funds and all other guide about ELSS funds. If you have any doubt, you can ask us in the comment below. For more updates on mutual funds or investment, keep visiting us.