• HDFC
• 17 Jul 2018
• ELSS

HDFC, Tester

What are the best ELSS funds to invest in 2018?

 

Equity Linked Investment Schemes are amongst the most popular tax-saving investments. More commonly known as ELSS, it is a diversified mutual fund where investors can invest predominantly in equity but can also have a little bit of debt in their portfolio.

 

ELSS’ are called tax-saving funds because investors investing in these funds can claim deductions under Section 80C of the Income Tax Act, 1961. Let’s take an example to understand this better. If you have a taxable income of Rs. 9,00,000 in a year, and if you invest Rs. 1,50,000 in an ELSS scheme, tax will be levied only Rs. 7,50,000. So, which funds should you invest in? Which are the best ELSS funds to invest in 2018? How should you evaluate performance? Use these parameters to find the best ELSS funds to invest in 2018.

 

• Time-period: ELSS funds are locked-in for three years. So, it makes sense to look at the performance of funds over a similar time period. Don’t just look at the fund’s return in isolation. Compare it with peers.
• Rating: Next, look at the star rating of the equity mutual fund. A rating of 4 and 5 stars means the mutual fund is a good pick according to the experts tracking the mutual fund market.
• Risk: Finally, look at the risk profile of the fund. If you are an aggressive investor and have a bigger risk appetite, you can look for funds with a higher equity focus. If you are more conservative, look for ELSS funds that have a health debt component.

 

To shortlist your funds, visit the HDFC Securities site for a listing of ELSS funds and their performance. Here are some of the best ELSS funds to invest in 2018: 

 

• Aditya Birla SL Tax Savings Fund (G): Has a below average risk, a rating of 4-stars* and has delivered 13.72% annualized returns over the last three years.
• Aditya Birla SL Tax Relief 96: Has a 5-star rating, low risk, and has given 13.48% returns in the last three years.
• IDFC Tax Advantage (ELSS) Fund: Has a 4-star rating, a below average risk grade, and has returned 13.67% annualized gains in the last three year.
• Motilal Oswal Long-term Equity Fund: Has a 5-star rating, has delivered category-beating returns of 19.03% and enjoys a low-risk grade.
• L&T Tax Advantage Fund: Has delivered 14.81% annualized returns in the last three years, enjoys a 4-star rating and a below average risk rating.

 

(Based on valueresearchonline.com ratings)