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An Equity-linked Savings Scheme (ELSS) has a compulsory lock-in period of three years.

So, you cannot switch before that. Moreover, if you do not intend to invest in mutual funds saving tax, which otherwise is a beneficial proposition, avoid opting for ELSS. Instead, invest in equity diversified funds like HDFC Top 200, Magnum Contra or DSPBR Top 100 Equity. Click here for Cloud Computing Also Read Related Stories News Now

- Banks seek parity with MFs - Loan: Manju Srivatsa - NFOs bring back interest in equity Mutual Funds - Inflows into Equity saving schemes at five-year low - Have a steady start - ELSS: Tax gain with returns I am invested in Sundaram BNP Paribas Capex Opportunities Fund since November, 2007. Its returns are in negative, should I exit?

-Manohar Rao Sundaram BNP Paribas Capex Opportunities Fund is a 4-star rated sectoral fund. It mainly invests in capital goods sector. It has been in the red (minus 10.03 per cent) from November 2007 to February 11, 2010. In 2007, the performance was at its peak. But, in the 2008 downturn, it could not beat its category average. Since then, it seems to be on a recovery mode. If this is the only fund in your portfolio, you must think of getting out. Instead of a sectoral fund, consider a consistent performing equity diversified fund like HDFC Top 200, or DSPBR Equity. What are the advantages of investing in debt funds, when the returns they give are just around eight per cent or less? I believe the same can be attained by investing in a normal fixed deposit (FD).

-Jagadeesh Kumar Kanakala FDs are safer investments instruments because the return is guaranteed. But, the main reason to prefer debt funds over FDs is the tax treatment of gains and income. Any gain or income on FD investment is added to the investor's income and taxed accordingly, irrespective of the investment tenure. So if you are in a higher tax bracket, it works much to your disadvantage.

16 per cent of the dividend declared. -Srikanth All the above mentioned funds are equity diversified funds. For this. may be. bear and bull markets. Any redemption after a year attracts a long-term capital gains tax of 11. It is worth to noting that the government levies a Dividend Distribution Tax (DDT) on debt funds. While HDFC Top 200 and Reliance Growth have been consistent good performers for the past few years. investors benefits by opting for a debt fund for a period of more than one year. Help me choose suitably. the tenure matters.66 per cent (with indexation). We suggest you either increase the SIP amount in the first two funds or include one more fund. the latter had been a poor performer lately. I am considering HDFC Top 200. The gains get added to the income if the fund is redeemed within a year of investment. While the former has been an average large-cap fund. which is borne by the fund house (but ultimately passed on to the investor).000 via monthly systematic investment plan (SIP).33 per cent (without indexation) or 22. DSPBR Top 100 or Birla Sun Life Frontline Equity. I am planning to invest Rs 2. This is 14. Nevertheless. lagging the category average in both. Reliance Growth. . we have some reservations on Reliance Vision and Sundaram BNP Paribas Growth Reg (both rated 3-star).In case of debt funds. Reliance Vision and Sundaram BNP Paribas Growth Reg.

57% 22.10 1. has done well during that time.86 1. and have done reasonably well over that period. The limitation with this list is that it doesn’t contain any mutual funds that have been around for less than 5 years even if they performed well. and then narrow down options from there.19 April 1999 Nov 1999 March 1997 17.31% 2. After that I noted their expense ratio.ELSS Mutual Fund Options I wrote a post on how to find tax saving mutual funds some time ago. Doing this gave me a list that has some tax saving funds that have been around for a very long period. The expenses are important because they eat up your returns. For example – DSP Blackrock is a ELSS mutual fund that has been around for about 4 years.42% 2. and took the 10 best performing out of them. so I wanted to highlight them as well.32% 1.96 2.34% 17. Name Birla Sun Life Tax Relief – 96 Inception Date March 1996 5 year returns 16. Then I looked at the funds that were around for 5 or more years.38 Canara Robeco March 1993 Can Equity Tax Saver HDFC Tax Saver ICICI Prudential Tax Plan SBI Magnum Tax Gain Scheme – 93 Principal Personal Tax Saver Franklin India Tax Shield Sundaram Tax Saver Sahara Tax Gain March 1996 17.98 August 1999 15. and I used that information to get a list of all the ELSS mutual funds currently available in India.31% Expense Ratio 1.96 2.78 March 1996 16.48% March 1993 16.73% 22. but is missing from this list. as well as their inception date in the table below.50 .80% 1.

HDFC TaxSaver (ELSS) Investment Objective The investment objective of the Scheme is to achieve long term growth of capital. but that’s not the case. 3 Years from the date of allotment of the respective Units. NIL Unfront commission shall be paid directly by the investor to the ARN Holder (AMFI registered Distributor) based on the investors' assessment of various factors including the service rendered by the ARN Holder. there is no way to really predict which one will do better than the rest. Net Asset Value Periodicity Normally dispatched within 3-4 Business days Redemption Proceeds .14% 1. In the absence of that I compiled a list of long standing performers.Reliance Tax Saver August 2005 15. Basic Scheme Information Nature of Scheme Inception Date Option/Plan Open Ended Equity Linked Savings Scheme with a lock-in period of 3 years December 18. 1995 Dividend Option. and that’s deliberate because as soon as you sort something your brain tends to think of it as best to worst from top to bottom. Entry Load (For Lumpsum Purchases and investments through SIP/STP) Please click here to go through the addendum. For mutual funds – the best mutual fund is the one that will give you the maximum return for your holding period. then you can select one or two funds from this list for your investment. Minimum Application Amount For new & existing investors :Rs.500 and in multiples (click here for SIP Details) thereafter. Lock-In-Period Every Business Day.Growth Option. and if you think this criteria makes sense. but since that’s in the future. The Dividend Option offers Dividend Payout and Reinvestment Facility. and have presented you with that information.88 This list is not sorted in any particular order. NIL Exit Load No Exit Load shall be levied on bonus units and units allotted (as a % of the Applicable NAV) on dividend reinvestment.

would be adhered to in the management of this Fund.75% (#) Any change in the expense ratio will be updated within two working days. Asset Type 1 Equities & Equity related instruments Debt Securities.50% On the next 300 crores average weekly net assets 2. The Scheme may also invest a part of its corpus.Tax Benefits (As per present Laws) Current Expense Ratio (#) (Effective Date 22nd May 2009) Please click for details On the first 100 crores average weekly net assets 2. Subject to the Regulations and the applicable guidelines. subject to the regulations. Plan Name NAV Date NAV Amount Dividend Option 11 Mar 2012 Growth Option 11 Mar 2012 TOP Investment Pattern The asset allocation under the respective Plans will be as follows : Sr. The Scheme may also invest upto 25% of net assets of the Scheme in derivatives such as Futures & Options and such other derivative instruments as may be introduced from time to time for the purpose of hedging and portfolio balancing and and other uses as may be permitted under the regulations and guidelines. bonds and mutual funds and such other instruments as may be allowed under the Regulations from time to time. Such changes will be for short term and . in overseas markets in Global Depository Receipts (GDRs).25% On the next 300 crores average weekly net assets 2. Also refer to Section on Stock Lending by the Fund. the asset allocation pattern indicated above may change from time to time. keeping in view market conditions.No. it would be endeavoured to review and rebalance the composition. if undertaken. The ELSS (Equity Linked Savings Scheme) guidelines. the intention being at all times to seek to protect the NAV of the scheme. would not exceed 20% of the net assets of the scheme. market opportunities. Money Market 2 instruments(including cash/call money) (% Of Portfolio) Minimum 80% Maximum 20% Risk Profile Medium to High Low to Medium Investment in Securitised debt. If the investment in equities and related instruments falls below 80% of the portfolio of the Scheme at any point in time. not exceeding 40% of its net assets. Notwithstanding anything stated above. It may be clearly understood that the percentages stated above are only indicative and are not absolute and that they can vary substantially depending upon the perception of the AMC. applicable regulations and political and economic factors. overseas equity. the Scheme may.00% On the balance of the assets 1. engage in Stock Lending activities. ADRs. as applicable.

zero interest bonds. The credit risk analysis would involve an assessment of the past track record and prospects for the company. Provided further and subject to the above. initial public offers. Money Market Instruments include :          Commercial papers Commercial bills Treasury bills Government securities having an unexpired maturity upto one year Collateralised Borrowing & Lending Obligations (CBLO) Certificate of deposit Usance bills Permitted securities under a repo / reverse repo agreement Any other like instruments as may be permitted by RBI / SEBI from time to time Investments will be made through secondary market purchases. placements and right offers (including renunciation). mortgage backed securities and any other domestic fixed income securities including structured obligations etc. State and local Governments. Securities issued by Public / Private sector banks and development financial institutions.defensive considerations. bonds. floating rate bond / notes. Investments made from the net assets of the Scheme would be in accordance with the features of the Scheme and the provisions of the SEBI Regulations.) include. TOP Investment Strategy Debt securities (in the form of non-convertible debentures. secured / unsecured. Securities issued by Corporate Entities (Public / Private sector undertakings). any change in the asset allocation affecting the investment profile of the Scheme and amounting to a change in the Fundamental Attributes of the Scheme shall be effected in accordance with sub-regulation (15A) of regulation 18 of SEBI regulations. The AMC will strive to assess risk of the potential investment in terms of credit risk. The AMC retains the flexibility to invest across all the securities / instruments in debt and money market. but are not limited to :     Debt obligations of the Government of India. An interest rate scenario analysis would be performed on an ongoing basis. Government Agencies and statutory bodies (which may or may not carry a state / central government guarantee). considering the impact of the developments on the macro-economic front and the demand and . pass through certificates. interest rate risk and liquidity risk. privately placed. rated / unrated of any maturity. the industry it operates in. Securities that have been guaranteed by Government of India and State Governments. deep discount bonds. securitised debt. other public offers. the future cash flows from operations and the requirement for additional capital expenditure. asset backed securities. The securities could be listed. unlisted. secured premium notes.

Based on the above analysis. The AMC Board and the Trustee shall approve the detailed parameters for such investments. The details of such investments would be communicated by the AMC to the Trustee in their periodical reports. The Scheme may also invest in suitable investment avenues in overseas financial markets for the purpose of diversification. The Scheme may also use various derivative and hedging products from time to time. the AMC may not be able to realize the full value of these securities to an adverse impact on the Net Asset Value of the Scheme. the prior approval of Board of AMC and Trustee shall be sought. However.500 for HDFC TaxSaver Fund . 2000. the AMC aims to identify securities which offer superior levels of yield at low levels of risk. It would also be clearly mentioned in the reports. In the event of a requirement to liquidate all or a substantial part of these investments in a very short duration of time. MFD/CIR/9/120/2000 dated November 24. The AMC will utilise ratings of rating agencies registered with SEBI as an input in the decision making process. TOP Systematic Investment Plan (SIP) Details Serial Scheme Name No. as and when permissible under the regulations. commensurate with the Scheme objectives and subject to necessary stipulations by SEBI / RBI.) Rs. 2009 TOP .e. investment in structured securities that provide easy liquidity and securities that have reasonable secondary market activity. The investment team of the AMC will carry out an internal credit analysis of all securities included in the investment universe. future contracts or buy or sell options in an effort to maintain risks at acceptable levels. Pursuant to SEBI Circular No. the AMC may constitute committee(s) to approve proposals for investments in unrated debt instruments. the Mutual Fund may also appoint overseas investment advisors and other service providers. INVESTMENT POLICIES Consistent with the investment objectives of the scheme. The Investment Manager may therefore enter into forward contracts.Dividend / Monthly & NIL Growth Rs.1500 for Quarterly Exit Load # 1 NIL # Applicable for SIPs registered w.f from August 1. The AMC will attempt to reduce liquidity risk by investing in securities that would result in a staggered maturity profile of the portfolio. Investments in bonds and debentures will usually be in instruments that have been assigned high investment grade ratings by a rating agency registered with of funds. in an attempt to protect the value of the portfolio and enhance Unit holders’ interest. as would be available and permitted by SEBI. in case any unrated debt security does not fall under the parameters. Towards this. Minimum Application Entry Load # Amount(Rs. how the parameters have been complied with. the AMC would manage the investments of the Scheme on a dynamic basis to exploit emerging opportunities in the investment universe and manage risks at all points in time.

Banks Industrial Capital Bharat Electronics Ltd.Dedicated Fund Manager . 2012) Company Industry+ EQUITY & EQUITY RELATED State Bank of India Banks Consumer Non ITC Ltd. Software Infosys Ltd.59 2.07 4. DVR Auto Bank of Baroda Banks NTPC Ltd.Foreign Securities TOP Portfolio .56 3.Holdings (as on January 31.14 0.08 2.39 100.Fund Manager Mr. Software Telecom Bharti Airtel Ltd.00 0.13 3. Miten Lathia .016. 2011 (Rs In Lakhs) Note : $ Sponsor % to NAV 6.32 0.52 89.77 5. Goods Tata Motors Ltd. Power Total of Top Ten Equity & Equity Related Holdings Total Equity & Equity Related Holdings Total Money Market Instrument & Other Credit Exposures (aggregated holdings in a single issuer) Short Term Deposits as margin for Futures & Options Cash margin Other Cash.44 2.44 37.58 . Durables Tata Consultancy Services Ltd. Services ICICI Bank Ltd.88 4. Cash Equivalents and Net Current Assets Grand Total Average AUM for the quarter ended December 31.00 2.56 2.15 10. Vinay Kulkarni (since Nov 21.88.2006) Mr.

SIP best way to invest in ELSS As discussed. your confusion will be reduced since performance of “Best ELSS mutual fund schemes in 2011-12”is reviewed. while opting for SIP in particular ELSS scheme the fund considers separate 3 year lock-in period for each SIP installment. This is not the right way to invest in mutual fund schemes. This will take care of volatility in the index and invests a particular amount regularly into your fund for tax saving. the 3 year lock in for the units bought on 5th January 2012 would end on 5th January 2015. . Table with top performing ELSS schemes in 2011-12 § Religare Tax Plan (G)  Asset allocation: 80% in equities and 20% in debt instruments. In equity ~60% is invested in large cap and ~40% in mid cap.Top 5 ELSS schemes to invest in 2011-12 In our market 71 equity linked savings schemes (ELSS) are floating from various asset management companies. and so on. However. To gain maximum benefit it’s recommended to invest regularly throughout the year by following systematic investment plan (SIP). In this article. for the units bought on 5th February 2012 would end on 5th February 2015.e. there is a 3 year lock-in period for ELSS investments i. any investment that you make in ELSS schemes cannot be liquidated before 3 years. Investors are in dilemma while searching the best available fund based on their goals and risk taking capability. most investors generally rush to invest in ELSS schemes with lump sum amount between January and March. Most investors generally search for best performing ELSS schemes between January and March for investment and to save tax because the financial year is coming to end. For example. So.

Investment style: Bottom up approach. Performance: This fund invests is tilted towards investment in large cap stocks which is giving consistent performance among its peers and benchmark index. Top holdings: ICICI Bank. Infosys. energy. . The fund has outperformed its peers with fare returns in last 5 years. However. Performance: Aggressive towards investment in mid cap and small cap stocks. FMCG and services which constitutes around 65% of total portfolio. FMCG and healthcare which constitutes around 70% of total portfolio. Reliance Industries and Tata Consultancy which makes up ~20% of net assets in the fund. HDFC Bank and ITC which makes up ~27% of net assets in the fund. Investment style: Mixture of top down approach and bottom up approach. Top holdings: HDFC Bank. technology. telecommunication and automobile which constitutes around 65% of total portfolio. Investment style: Bottom up approach. § Canara Robeco Equity Tax Saver (D)      Asset allocation: 85% in equities and 15% in debt instruments. § Fidelity Tax Advantage fund (G)      Asset allocation: 80% in equities and 20% in debt instruments. Reliance Industries. Top Sectors: Financial services. The fund gave ~21% annualized returns in last 10 years and its outperforming peers / benchmark index in last 5 years. In equity ~80% is invested in large cap and ~20% in mid cap. Top Sectors: Financial services. energy. Infosys and ITC which makes up ~30% of net assets in the fund. Infosys. In equity ~70% is invested in large cap and ~30% in mid cap. FMCG and construction which constitutes around 65% of total portfolio. technology. ICICI Bank. In equity ~70% is invested in large cap and ~30% in mid cap. Performance: Aggressive towards investment in mid cap stocks and diversifies its portfolio by investing in various sectors. Top Sectors: Financial services. Top holdings: HDFC Bank. § Franklin India Taxshield Fund (G)    Asset allocation: 80% in equities and 20% in debt instruments. energy. technology. energy. the performance of this fund is affected when there is rally in mid cap stocks.    Investment style: Bottom up approach Top Sectors: Financial services. Reliance Industries. technology.

ITC. Infosys. energy. Performance: This fund is invested towards mid cap stocks which makes it aggressive in this category. Infosys. ICICI Bank. Top Sectors: Financial services. Top holdings: State Bank of India. § HDFC Taxsaver Fund (G)      Asset allocation: 80% in equities and 20% in debt instruments. In last 10 years the fund gave ~24% annualized returns to its investors outperforming benchmark index. technology. Tata Consultancy Services. In last 10 years the fund gave ~28% annualized returns to its investors outperforming benchmark index and peers in the category. Interpretation of risks while investing in this schemes Looking at returns shall not be the only criteria for investments. Grasim Industries and Bharti Airtel which makes up ~35% of net assets in the fund. Performance: This fund is idle for conservative investors due to its investment style skewed towards large cap / blue chip stocks. You need to analyze the risks while investing in these schemes. FMCG and healthcare which constitutes around 70% of total portfolio. Reliance Industries. Investment style: Top down approach. ICICI Bank and Bharti Airtel which makes up ~30% of net assets in the fund. The return in last one year is affected due to more exposure towards banking stocks which were under pressure on account of liquidity tightening by central bank. In equity ~60% is invested in large cap and ~40% in mid cap.  Top holdings: HDFC Bank. Table with interpretation of risks in ELSS schemes .

So. The investors investing in this financial year will get the tax benefits and amount will be locked-in for 3 years.Concern over future of ELSS after implementation of Direct Tax Code (DTC) The government is planning to implement DTC from April 2012 or from next financial year. However. ELSS will not be considered as tax saving investments. assume if this is a final draft and DTC is implemented from April 2012 then this quarter would be last to invest in such schemes. top AMC’s are trying their best to get approval on tax benefits for investments in ELSS schemes under DTC. . As per last draft of DTC. the future of ELSS is uncertain until final draft of DTC is approved. So. The expert’s are of the opinion such steps from government is to push investments in new pension schemes (NPS) which could be other alternative to build wealth in the long term and gain tax benefits on investment.

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