Equity: ELSS

Mutual fund is a financial instrument which pools the money of different people and invests them in different financial securities like stocks, bonds etc. Each investor in a mutual fund owns units of the fund, which represents a portion of the holdings of the mutual fund. Let us understand with the help of an example. Suppose you invest Rs 100,000 in a mutual fund. If the price of a unit of the fund is Rs 10, then the mutual fund house will allot you 10,000 units. Let us assume the total money invested in the fund by all the investors is Rs 100 crores. The mutual fund invests the money to buy stocks. Then each unit will represent 0.000001% of all the stocks the mutual fund has in its holdings. If you have 10,000 units, then your portion of the mutual fund stock holdings will be 0.01%. As the value of securities held by the mutual increases or decreases, so will the price of the units.

The Asset Management Company (AMC), i.e. the company which manages the mutual fund raises money from the public. The AMC then deploys the money by investing in different financial securities like stocks, bonds etc. The securities are selected keeping in mind the investment objective of the fund. For example, if the investment objective of the fund is capital appreciation, the fund will invest in shares of different companies. If the investment objective of the fund is to generate income, then the fund will invest in fixed income securities that pay interest. Each investor in a mutual fund owns units of the fund, which represents a portion of the holdings of the mutual fund. On an ongoing basis, the fund managers will manage the fund to ensure that the investment objectives are met. For the services the AMCs provide they incur expenses and charge a fee to the unit holders. These expenses are charged against proportionately against the assets of the fund and are adjusted in the price of the unit. Mutual funds are bought or sold on the basis of Net Asset Value (NAV). Unlike share prices which changes constantly depending on the activity in the share market, the NAV is determined on a daily basis, computed at the end of the day based on closing price of all the securities that the mutual fund owns after making appropriate adjustments.

There are 5 key advantages of investing in mutual funds:-

1. Risk Diversification:

Mutual funds help investors diversify their risks by investing in a fairly portfolio of stocks across different sectors. A diversified portfolio reduces risks associated with individual stocks or specific sectors. If an equity investor were to create a well diversified portfolio by directly investing in stocks it would require a large capital outlay. On the other hand mutual fund investors can buy units of a diversified equity fund with an investment as low as 5,000/- only (even lower for ELSS funds). Further mutual funds are managed by professional fund managers who are experts in picking the right stocks to get the best risk adjusted returns. Retail investors often lack this expertise.

2. Economies of scale in transaction costs:

Since mutual funds buy and sell securities in large volumes transaction costs on a per unit basis is much lower than buying or selling stocks directly.

3. Tax efficiency:

Mutual funds are more tax efficient than most other investment products. Long term capital gains (holding period of more than 1 year) for equity mutual funds are tax exempt. Further dividends of equity funds are also tax free. For debt funds long term capital gain (holding period of more than 3 years) is taxed at 20% with indexation. Once indexation (due to inflation) is factored in the long term capital gains tax is reduced considerably, especially for investors in the higher tax bracket.

4. High Liquidity:

Open ended mutual funds are more liquid than many other investment products like shares, debentures and variety of deposit products (excluding bank fixed deposits). Investors can redeem their units fully or partially at any time in open ended funds. Moreover, the procedure of redemption is standardized across all mutual funds.

5. Variety of products and modes of investment:

Mutual funds offer investors a variety of products to suit their risk profiles and investment objectives. Apart from equity funds, there are also income funds, balanced funds, monthly income plans and liquid funds to suit different investment requirements. Mutual funds also offer investors flexibility in terms of modes of investment and withdrawal. Investors can opt for different investment modes like lump sum (or one time), systematic investment plans, systematic transfer plans (from other mutual fund schemes) or switching from one scheme to another.

Scheme Name Launch Date AUM (Crore) TER (%) Riskometer Trailing Returns (%)
1 Year 3 Years 5 Years 10 Years
Bank of India ELSS Tax Saver Reg Gr 25-02-2009 1,182.15 2.12 Very High -2.95 15.14 27.63 14.27
Franklin India ELSS Tax Saver Gr 05-04-1999 5,986.40 1.86 Very High 6.95 16.68 29.20 12.26
HDFC ELSS Tax saver Gr 05-03-1996 14,671.37 1.67 Very High 10.91 20.33 30.52 12.42
Motilal Oswal ELSS Tax Saver Fund Reg Gr 05-01-2015 3,405.01 1.87 Very High 8.53 21.34 28.35 15.42
SBI Long Term Equity Reg Gr 31-03-1993 25,723.50 1.60 Very High 7.99 22.56 31.94 13.39
BANDHAN ELSS Tax Saver Reg Gr 26-12-2008 6,232.38 1.77 Very High 1.25 12.38 30.95 13.14
BARODA BNP PARIBAS ELSS Tax Saver Gr 05-01-2006 813.78 2.21 Very High 7.78 14.01 22.96 11.07
DSP ELSS Tax Saver Reg Gr 05-01-2007 14,981.09 1.65 Very High 13.98 17.14 29.44 14.87
HSBC ELSS Tax saver Fund Reg Growth 01-01-2013 3,604.41 1.93 Very High 10.66 15.44 26.42 12.49
Invesco India ELSS Tax Saver Fund Gr 29-12-2006 2,482.86 1.95 Very High 6.06 12.09 23.72 12.15
Mahindra Manulife ELSS Tax Saver Reg Gr 05-10-2016 839.23 2.21 Very High 3.91 11.53 25.26 -
Mirae Asset ELSS Tax Saver Reg Gr 01-12-2015 22,411.17 1.57 Very High 6.44 12.65 27.18 -
Nippon India Tax Saver (ELSS) Gr Gr 05-09-2005 13,354.46 1.72 Very High 6.06 14.62 27.32 9.19
Parag Parikh ELSS Tax Saver Reg Gr 07-07-2019 4,477.32 1.73 Very High 11.73 16.43 29.37 -
PGIM India ELSS Tax Saver Reg Gr 11-12-2015 698.40 2.28 Very High 7.08 10.05 25.72 -
Quant ELSS Tax Saver Gr 01-04-2000 9,681.09 1.68 Very High -7.97 12.85 37.49 19.09
Sundaram ELSS Tax Saver Fund Reg Gr 01-01-2013 1,212.38 2.25 Very High 4.83 12.38 26.00 12.71
Union ELSS Tax Saver Gr 23-12-2011 800.30 2.35 Very High 3.02 12.47 25.86 10.79
Scheme Name Launch Date AUM (Crore) TER (%) Riskometer Trailing Returns (%)
1 Year 3 Years 5 Years 10 Years
Bank of India ELSS Tax Saver Reg Gr 25-02-2009 1,182.15 2.12 Very High -2.95 15.14 27.63 14.27
Franklin India ELSS Tax Saver Gr 05-04-1999 5,986.40 1.86 Very High 6.95 16.68 29.20 12.26
HDFC ELSS Tax saver Gr 05-03-1996 14,671.37 1.67 Very High 10.91 20.33 30.52 12.42
Motilal Oswal ELSS Tax Saver Fund Reg Gr 05-01-2015 3,405.01 1.87 Very High 8.53 21.34 28.35 15.42
SBI Long Term Equity Reg Gr 31-03-1993 25,723.50 1.60 Very High 7.99 22.56 31.94 13.39
BANDHAN ELSS Tax Saver Reg Gr 26-12-2008 6,232.38 1.77 Very High 1.25 12.38 30.95 13.14
BARODA BNP PARIBAS ELSS Tax Saver Gr 05-01-2006 813.78 2.21 Very High 7.78 14.01 22.96 11.07
DSP ELSS Tax Saver Reg Gr 05-01-2007 14,981.09 1.65 Very High 13.98 17.14 29.44 14.87
HSBC ELSS Tax saver Fund Reg Growth 01-01-2013 3,604.41 1.93 Very High 10.66 15.44 26.42 12.49
Invesco India ELSS Tax Saver Fund Gr 29-12-2006 2,482.86 1.95 Very High 6.06 12.09 23.72 12.15
Mahindra Manulife ELSS Tax Saver Reg Gr 05-10-2016 839.23 2.21 Very High 3.91 11.53 25.26 -
Mirae Asset ELSS Tax Saver Reg Gr 01-12-2015 22,411.17 1.57 Very High 6.44 12.65 27.18 -
Nippon India Tax Saver (ELSS) Gr Gr 05-09-2005 13,354.46 1.72 Very High 6.06 14.62 27.32 9.19
Parag Parikh ELSS Tax Saver Reg Gr 07-07-2019 4,477.32 1.73 Very High 11.73 16.43 29.37 -
PGIM India ELSS Tax Saver Reg Gr 11-12-2015 698.40 2.28 Very High 7.08 10.05 25.72 -
Quant ELSS Tax Saver Gr 01-04-2000 9,681.09 1.68 Very High -7.97 12.85 37.49 19.09
Sundaram ELSS Tax Saver Fund Reg Gr 01-01-2013 1,212.38 2.25 Very High 4.83 12.38 26.00 12.71
Union ELSS Tax Saver Gr 23-12-2011 800.30 2.35 Very High 3.02 12.47 25.86 10.79
LIC MF ELSS Tax Saver Reg Gr 31-03-1997 1,007.32 2.18 Very High 13.19 13.64 22.12 10.81
WhiteOak Capital ELSS Tax Saver Fund Reg Gr 14-10-2022 297.88 2.34 Very High 12.33 - - -
HSBC Tax Saver Equity Gr 05-01-2007 210.48 2.46 Very High 10.34 14.37 25.87 12.09
Quantum ELSS Tax Saver Reg Gr 05-04-2017 200.37 1.99 Very High 9.01 15.76 26.79 -
JM ELSS Tax Saver Fund Gr 31-03-2008 171.59 2.39 Very High 8.16 16.18 27.87 14.16
ICICI Prudential ELSS Tax Saver Fund Gr 19-08-1999 12,743.59 1.74 Very High 7.67 12.85 26.44 12.15
Tata ELSS Tax Saver Gr Reg 13-10-2014 4,053.34 1.85 Very High 7.6 12.84 25.04 12.97
UTI ELSS Tax Saver Fund Reg Gr 01-08-2005 3,386.30 1.91 Very High 6.55 10.27 23.6 10.98
Taurus ELSS Tax Saver Reg Gr 31-03-1996 72.17 2.43 Very High 6.14 15.17 24.07 11.95
Canara Robeco ELSS Tax Saver Reg Gr 05-02-2009 7,724.22 1.71 Very High 5.43 11.9 24.92 12.79
ABSL ELSS Tax Saver Gr 29-03-1996 13,629.03 1.72 Very High 5.32 10.25 17.61 9.5
Edelweiss ELSS Tax Saver Reg Gr 30-12-2008 352.27 2.35 Very High 5.29 12.31 23.94 10.68
Axis ELSS Tax Saver Reg Gr 05-12-2009 32,168.33 1.56 Very High 4.73 8.92 19.22 11.04
360 ONE ELSS Tax Saver Nifty 50 Tax Saver Index Fund Reg Gr 04-12-2022 73.24 0.52 Very High 4.68 - - -
Sundaram Diversified Equity (ELSS) Reg Gr 10-05-2005 1,362.00 2.24 Very High 3.75 11.05 23.88 10.56
Navi ELSS Tax Saver Fund Reg Gr 30-12-2015 52.67 2.29 Very High 3.22 9.76 21.15 -
ITI ELSS Tax Saver Reg Gr 18-10-2019 343.31 2.32 Very High 3.05 17.73 24.73 -
Kotak ELSS Tax Saver Gr 01-11-2005 5,411.91 1.80 Very High 2.56 13.25 25.96 12.81
BAJAJ FINSERV ELSS TAX SAVER FUND REG GR 29-01-2025 33.00 2.25 Very High - - - -
Groww ELSS Tax Saver Reg Gr 20-12-2017 42.61 2.25 Very High -1.53 10.91 20.03 -
NJ ELSS Tax Saver Scheme Reg Gr 16-06-2023 227.21 2.31 Very High -1.71 - - -
Shriram ELSS Tax Saver Reg Gr 18-01-2019 44.32 2.34 Very High -5.67 8.98 17.8 -
Samco ELSS Tax Saver Fund Reg Gr 05-12-2022 97.98 2.38 Very High -10.56 - - -
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