A mutual fund (MF) scheme’s worth can be gauged through an interplay of factors such as category it falls under, reputation of mutual fund house and that of fund managers, and importantly — the compound annual returns (CAGR) which the scheme has managed to deliver over a period of time, so on and so forth.
Although each factor has its own significance, the annual returns are seen as one of the key factors by investors before they zero in on a mutual fund scheme to invest.
Here we shortlist a few ELSS funds that have given a CAGR return of more than 13 percent in the past five years. But before that, we will explain what exactly are equity linked savings scheme (ELSS).
What are ELSS?
An Equity Linked Savings Scheme (ELSS) is an equity scheme that enables an individual or HUF a deduction from total income of up to ₹1.5 lakh under section 80C of I-T Act 1961.
This means if an investor happens to invest an amount of say ₹1,00,000 in an ELSS, then this would be deducted from their total taxable income, thus bringing their tax burden down.
|Mutual Funds||Returns (%)||Benchmark (%)|
|Quant Tax Plan||19.68||11.30|
|Canara Robeco Equity Tax Saver Fund||14.36||11.54|
|Mirae Asset Tax Saver Fund||13.43||11.30|
(Source: AMFI; Regular 5-year-returns as on Feb 15, 2023)
As we can see in the table above, Quant Tax Plan gave a return of 19.68 percent in the past five years against a benchmark of 11.30 percent as on Feb 15, 2023.
Canara Robeco Equity Tax Saver Fund delivered a return of 14.36 percent and Mirae Asset Tax Saver Fund gave a return of 13.43 percent.
One of the key features of equity linked savings schemes (ELSS) is the tax exemption of up to ₹1.5 lakh that these units offer.
Aside from this, these units also have a lock-in period of three years from the date of allotment. And once the three-year period is over, these units can be redeemed or switched. These units offer both growth as well as dividend options.
It is not mandatory to invest in lumpsum only to be able to claim tax exemption. Investors can also invest via Systematic Investment Plans (SIP) as well, and total investment of up to ₹1.5 lakhs, made in one year, is eligible for tax deduction.
High return yielding schemes
Quant Tax Plan: This scheme was launched in March 2000. The fund managers of the scheme are Ankit Pande and Vasav Sehgal.
The scheme has given a return of 14.82 percent since inception. This means if someone had invested ₹10,000 at the time of launch, the scheme would have swelled to ₹2,33,499 (as on Jan 31, 2023).
Top five constituent stocks are ITC (9.83%), SBI (7.18%), RIL (5.86%), HDFC Bank (5.58%) and Ambuja Cements (5.5%).
Canara Robeco Equity Tax Saver Fund: It was launched on Jan 2013. The fund managers of the scheme are Vishal Mishra and Shridatta Bhanwalder.
It has given a CAGR return of 15.01 percent. The key constituent stocks are HDFC Bank (7.65%), ICICI Bank (7.07%), Infosys (5.8%), RIL (4.97%) and SBI (4.35%).
Mirae Asset Tax Saver Fund: The scheme was launched in Dec 2015. The scheme's fund manager is Neelesh Surana. The scheme has given a return of 17.12 percent. This means if someone had invested ₹10,000 at the time of inception, it would have swelled to ₹30,699.
The top constituent stocks are HDFC Bank (8.53%), RIL (6.78%), ICICI Bank (6.73%), Infosys (5.3%) and Axix Bank (4.54%).