Evaluating the annualised returns of a mutual fund scheme is imperative to evaluate its overall performance. Aside from this, there are a number of factors that induce investors to invest in a mutual fund scheme. These include the reputation of a fund house, past performance of fund managers and category in which the fund falls i.e., active or passive, among others.
Here we shed light on the performance of top-performing ELSS funds, particularly in the past five years. But first and foremost, we explain what are ELSS funds.
What are ELSS funds?
They are a class of mutual funds eligible for tax deductions under the provisions of Section 80C of the I-T Act, 1961. They have a lock-in period of three years which is the shortest among all tax-saving investments.
Some of the ELSS funds include Mirae Asset Tax Saver Fund, Nippon India Tax Saver Fund, LIC MF Tax Plan Fund, L&T Tax Advantage Fund, Kotak Tax Saver Fund, Invesco India Tax Plan Fund and HDFC Tax Saver Fund.
Out of these two equity mutual funds, two schemes — Canara Robeco Equity Tax Saver Fund and Quant Tax Plan — have given an annualised return of 15-22 percent per annum in the past five years.
As one can see in the table below, Canara Robeco Equity Tax Saver Fund delivered annualised return of 15.76 percent in the past five years against the benchmark return of 12.79 percent. The annualised return of Quant Tax Plan will be 22.20 percent against the benchmark return of 12.52 percent.
|ELSS funds||5-year returns (%)||Benchmark (%)|
|Canara Robeco Equity Tax Saver Fund||15.76||12.79|
|Quant Tax Plan||22.20||12.52|
(Source: AMFI, regular returns as on Nov 7, 2022)
Canara Robeco Equity Tax Saver Fund: This fund was launched on Feb 2, 2009. The scheme has given a return of 19.75 percent since its inception. This means if someone had invested ₹10,000 at the time of scheme’s launch, it would have grown to ₹1,19,203.
The key constituent stocks are ICICI Bank, HDFC Bank, Infosys, RIL, SBI, Axis Bank, Bajaj Finance, Hindustan Unilever, Maruti Suzuki and Bharti Airtel.
Quant Tax Plan: This scheme was launched in April 2000. It has given a return of 15.20 percent since the inception. This means if someone had invested ₹10,000 at the time of launch, it would have grown to ₹2,40,168.
The key constituent stocks are Ambuja Cements, ITC, Adani Ports, SBI, Patanjali Foods, L&T, RIL, NTPC, Kotak Mahindra and Indian Hotels.