Synopsis
ETMutualFunds looked at the ELSS category to see whether the schemes in it managed to beat their benchmarks over the 10-year period. There were 27 schemes in the ELSS category that have completed 10 years of existence.
iStockWe are at the fa*g end of the tax saving season. Taxpayers only have a week left to invest in tax-saving instruments to save income tax in this financial year. Here we would discuss one of the best tax saving options: tax saving or tax planning mutual funds or Equity Linked Saving Schemes (ELSS) that have offered investors around 13.35% returns over a long period of 10 years.
For late comers, you can save income taxes of up to Rs 1.5 lakh in a financial year. You can invest in certain specified investments like Public Provident Fund, five-year tax saving bank deposits, ELSS, among others if you want to save taxes in this financial year. Make sure you are choosing an option that matches your investment horizon and risk profile. If you are looking to invest for a period of at least five years and ready to take risk, you can choose ELSS funds.
The ability of actively-managed equity schemes to beat their benchmarks has become a hotly debated topic in the last few years. Many actively-managed schemes, especially those in the large cap category, have been struggling to beat their benchmarks in the last few years. This has resulted in proliferation of passively-managed schemes or index-based investment strategies. Many individuals have been opting for passive investments in the last few years.
That is why ETMutualFunds decided to take a look at the ELSS category to see whether the schemes in it managed to beat their benchmarks over the 10-year period. There were 27 schemes in the ELSS category that have completed 10 years of existence. Around 67% of schemes or 18 out of 27 schemes managed to beat their benchmarks in the 10 year period. We considered daily rolling returns in 10 years to get a better picture. ETMutualFunds considered daily rolling returns of these 27 schemes for a period of 10 years from March 21, 2013 to March 21, 2023.
Here’s the list of ELSS schemes that have outperformed their benchmarks in 10 years:
| Scheme Name | Scheme returns (%) | Benchmark | Benchmark return (%) |
| Axis Long Term Equity Fund | 17.01 | NIFTY 500 - TRI | 12.99 |
| ICICI Prudential Long Term Equity Fund (Tax Saving) | 15.81 | NIFTY 500 - TRI | 12.99 |
| Franklin India Taxshield Fund | 15.56 | NIFTY 500 - TRI | 12.99 |
| Invesco India Tax Plan Fund | 15.19 | S&P BSE 500 - TRI | 6.27 |
| Bandhan Tax Advt(ELSS) Fund | 14.91 | S&P BSE 500 - TRI | 6.27 |
| SBI Long Term Equity Fund | 14.87 | S&P BSE 500 - TRI | 6.27 |
| DSP Tax Saver Fund | 14.87 | NIFTY 500 - TRI | 12.99 |
| HDFC TaxSaver Fund | 14.38 | NIFTY 500 - TRI | 12.99 |
| Canara Robeco Equity Tax Saver Fund | 14.13 | S&P BSE 500 - TRI | 6.27 |
| Aditya Birla Sun Life Tax Relief '96 Fund | 13.83 | NIFTY 500 - TRI | 12.99 |
| Nippon India Tax Saver (ELSS) Fund | 13.49 | NIFTY 500 - TRI | 12.99 |
| Union Long Term Equity Fund | 13.45 | S&P BSE 500 - TRI | 6.27 |
| Bank of India Tax Advantage Fund | 13.43 | S&P BSE 500 - TRI | 6.27 |
| HSBC ELSS Fund | 13.34 | NIFTY 500 - TRI | 12.99 |
| Sundaram Tax Savings Fund | 13.30 | NIFTY 500 - TRI | 12.99 |
| Taurus Tax Shield Fund | 12.93 | S&P BSE 500 - TRI | 6.27 |
| JM Tax Gain Fund | 12.38 | S&P BSE 500 - TRI | 6.27 |
| Quantum Tax Saving Fund | 12.14 | S&P BSE 500 - TRI | 6.25 |
Source:ACE MF, Rolling returns as on March 21, 2023
Note, the above exercise is not a recommendation. This study was done to see whether these schemes have succeeded in beating their benchmarks over a long period of time. In simple terms, did these actively-managed schemes succeed in beating their benchmarks to justify their fees. And we are happy to report a majority of these schemes passed the test.
For our recommendation list, read: Best ELSS funds to invest in 2023. Always remember to invest according to your goals, investment horizons, and risk profile. Don’t look at tax planning in isolation. It should be part of your overall investment plan.
( Originally published on Mar 23, 2023 )
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As an expert in the field of mutual funds and investment strategies, I bring a wealth of knowledge and experience to shed light on the recent findings in the Equity Linked Saving Schemes (ELSS) category, particularly focusing on the 10-year performance of these schemes. My understanding of the intricacies of mutual funds, benchmark comparisons, and market trends allows me to analyze the provided information in depth.
The article from ETMutualFunds explores the performance of ELSS, a popular tax-saving investment avenue, over a decade. The piece highlights that investors in ELSS have enjoyed an average return of approximately 13.35% over the specified 10-year period. The tax-saving season is emphasized, with a reminder that individuals have a limited time to invest in tax-saving instruments for the current financial year.
The central question addressed is whether actively-managed ELSS schemes have been successful in outperforming their benchmarks over the last decade. A total of 27 ELSS schemes that completed 10 years of existence were analyzed. The findings indicate that 67% of these schemes, comprising 18 out of 27, managed to surpass their benchmarks during this period. To provide a comprehensive view, daily rolling returns were considered for the 27 schemes over the specified 10-year timeframe, from March 21, 2013, to March 21, 2023.
The article presents a list of ELSS schemes that have outperformed their benchmarks. Notable names include Axis Long Term Equity Fund, ICICI Prudential Long Term Equity Fund, Franklin India Taxshield Fund, and others, each exhibiting returns above their respective benchmarks.
It is crucial to note that the article emphasizes that the provided information is not a recommendation but rather a study conducted to assess whether these actively-managed ELSS schemes justified their fees by consistently beating their benchmarks over an extended period. The majority of the schemes analyzed are reported to have passed this test.
Additionally, the article encourages investors to align their investment choices with their goals, investment horizons, and risk profiles. The reminder is given that tax planning should be integrated into an overall investment plan rather than considered in isolation.
In conclusion, my expertise allows me to affirm that this article provides valuable insights into the performance of ELSS schemes over the past decade, offering investors a nuanced perspective on the actively-managed mutual fund landscape.
