An ELSS invests equal-to or more than 80% of its AUM in equities and equity related instruments. Investors can opt for either SIP’s or lump sum investment in ELSS.
Below are some of the benefits of the ELSS:
- Wealth creation with tax-saving – Historically, it has been seen that ELSS schemes have given significantly more returns than other tax saving schemes like PPF, 5 years FD, EPF etc.
- Shortest Lock-in period – ELSS has lock-in period of 3 years which is the shortest lock-in period among tax-saving instruments.
- Returns are tax free - Returns in the form of capital gain as well as dividends are tax free in the hands of investor.
|1 Y (%)||3 Y (%)||5 Y (%)|
|Aditya Birla SL Tax Relief ‘96(G)||3,962||22.6||20.1||21.8|
|Axis Long Term Equity Fund(G)||14,634||19.4||16.7||22.8|
|Reliance Tax Saver (ELSS) Fund(G)||9,114||20.5||14.4||21.4|
AUM as of September 2017, Returns are as on October 18, 2017
Axis Long Term Equity Fund invests in companies with sustainable profit growth to generate wealth over 3-4 years. Besides, the fund manager follows bottom-up approach to select the companies. The fund has invested ~70% of its AUM in large-cap stocks while ~25% in mid-cap stocks higher returns.
Reliance Tax Saver (ELSS) Fund does tactical allocation between large-cap, Mid-cap and Small-cap stock to generate higher returns. The fund invests in potential leaders with high growth prospect. Generally, the fund takes 2-3 sector call at a time and invests in high conviction mid-caps stocks. The fund has invested ~57% of its AUM in large-cap stocks, 25% in mid-cap stocks and 14% in small-cap stocks for higher returns.