ELSS FUNDS :-

Tax saving is one important part of our financial career, managing tax efficiently is
an art , if you can expertise that most of your financial issues could be resolved.
When it comes to saving taxes most of us wait till the month of March because we
continue our habits to push everything to the last day of submission like our school
time assignment. Most of us end of in the paws of wrong products just because we
want to get over with this. This specially happens to the investor who have just
started working and may not have much knowledge about investment or tax
saving.

Meaning of ELSS is Equity Linked Savings Scheme; it’s a category of mutual fund
which helps in saving taxes. Equity Linked Savings Schemes or ELSS is a
diversified equity mutual fund which qualifies for tax exemption under section 80C
of the Income Tax Act. It has two major advantages which include capital
appreciation and tax benefits. ELSS comes with a lock-in period of 3 years.
ELSS is suitable for all types of investors who do not like to take risks. There is no
age limit of starting it, but as always recommended, the earlier you start the better
the returns.

Features of ELSS funds:

• Lowest lock in period: There are other tax saving products available in the
market like PPF, NPS or FDs and so on, however all these products have a
lock in period of more than 5 years. ELSS is one such product which gives
you tax benefit with just a minimum lock in of 3 years.

• Tax Saving: ELSS is a kind of mutual fund which provides deduction of

upto 1.5lakhs from total income under section 80C.

WHO CAN INVEST IN ELSS?

According to Income Tax Law in India, every taxpayer is eligible for savings under
Section 80C up to Rs. 1,50,000. The guidelines for ELSS investment are laid out
by The Association of Mutual Funds in India (AMFI) and the Securities and
Exchange Board of India (SEBI).
HOW TO INVEST IN ELSS ONLINE?

The main reason for ELSS investment is tax savings, but one should get the best
returns as well. The investment in ELSS should be organized and planned and it
should not charge high expenses. Below are the steps involved in investing ELSS
online:

• Select the best tax saving mutual fund.

• Selecting the best tax saving mutual fund is an important step. You should
realize that the best performing mutual fund is not the only criteria for
selection. It should have all the qualities of being the best ELSS mutual fund
in class. The mutual funds you select should not be volatile and the fund
manager should be consistent. Make sure you select the funds from a reputed
asset management company.

• Choosing between Regular and Direct Plans of Tax Savings Mutual Funds
Schemes.

• The regular plan is traditional as it charges a higher expense ratio each year
due to the payment to the mutual fund distributor. Whereas the direct plan
started a few years back and has a low expense ratio as it does not pay the
mutual fund distributor. Both the funds have different NAV but the Direct
plan always gives better returns.

• Selection of Intermediary.

• As the investment in ELSS mutual funds are done through intermediaries

this is the next important step to take. However, the investment companies
also take the investments directly. There are many companies which sell and
help you understand how to invest in ELSS online.

• Lump Sum Investment or SIP in ELSS Mutual Funds.

• For ELSS, SIP is the best way of investment and will be recommended by
all. With SIP the target achievement is faster and quicker. As there is no right
time for investment in ELSS one cannot repent on the missed opportunity.
 • Getting your money back after 3 years.

• After a duration of 3 years, the investor will have to fill a form of

redemption. The money is then credited to your account.

Advantage of ELSS funds :-

• Just 3 years of lock in.

• The portfolio in which the will be invested is transparently available to all

the investors.

• Once the invested money completes 3 years of lock in period, you can with
draw 100% of it.

• ELSS provides you flexibility to invest via SIP or lump sum mode.

• The returns regenerated by ELSS funds are comparatively better than in

competitor products.

• Fund manager is the expert who manages your money, even if you are new
to investment but want to save tax, ELSS could be a good option.

• There is no maximum limit for investment in ELSS even once you tax limit
is exhausted , one can still invest in ELSS only thing is taxes can be saved
up to Rs. 46,800*/-.

Anaysis of Risk factor in ELSS :

 • The data analysis, as shown above, depicts the standard deviation of the
funds in three different investment tenure which are long-term periods of
three, five and ten years.
• The table shows the individual risk levels of the funds, where the standard
deviation of the funds in different periods depicts the variation in the values
of the funds concerning market changes and helpful to calculate whether the
risk is high or low.
• The funds with higher standard deviation than the category are strong
performers involving higher risk though high rewarding potential.
• The beta of some funds is more than 1 showing higher risk involved in
relation to market volatility.
• The funds with more than one beta are high performing funds at times when
the market performance is positive.

Risk and returns are proportionate to each other, higher the risk; higher the returns.
In the case of ELSS, as per the various returns analysis reports of the funds, the
risk is termed to be moderately high, and so are the returns. The long-term
investments in ELSS are actually beneficial for the sake of earning greater profits
irrespective of the market fluctuations.

TYPES OF ELSS FUNDS

Axis Long Term Equity Fund :-

• Axis Long Term Equity Fund was launched in 2009, it is today the biggest
fund in the ELSS mutual fund category. The fund invests 65-70 percent of its
money in India’s top 100 companies (also known as large caps), while 25-35
percent goes into mid and small cap companies.
• Return consistency is the hallmark of this fund. Since its inception, Axis
Long Term Equity has managed to beat its benchmark nine out of 10 times.
 Although the fund has not seen a big market correction like 2008, it
contained its losses well in falling markets of 2011 and 2018.
• The fund has delivered 14.93% average annual returns since inception while
the 7-year returns are 16.05%.

Suitability to whom :-
The Axis Long Term Equity Fund is suitable to investors that have a moderately
high risk appetite and are seeking long-term capital appreciation through
investments in equity and equity related instruments. As this is a tax-saving fund, it
is highly suitable for investors looking to make tax-saving investments before the
end of the financial year.
Investors who are looking to invest money for at least 3 years and looking for
additional benefits of income tax saving apart from higher returns expectations. At
the same time, these investors should also be ready for possibility of moderate
losses in their investments and 3 year lock-in period.

Analysis of risk factors :-

A mutual fund, in general, is subject to market risks. The risk factor is further
accentuated, if the fund belongs to the equity category. Any changes in the capital
market directly impact the fund’s NAVs and in turn your portfolio. If as an
investor, you are willing to take a moderately high risk, Axis Long Term Fund
might be the one to look for.
Factors such as the trading volume of individual stocks, liquidity risk, settlement
risk and the risk of losing your capital are some of the major risks that one might
have to deal with. If the fund invests in any securities that are not listed on the
stock exchanges, there are fundamental risks associated with it. The non-
availability of a lot of buyers and sellers can hamper your holdings. In the event
that a considerable number of investors wish to redeem their units, it might create
some risks. Should there be enough cash at hands, the fund manager can handle the
situations or in the extreme cases, they will have to sell some of the assets to make
way for redemption. In such cases, the fund manager must rebalance the units
accordingly.
The consistency in generating alpha while stabilizing over risk volatility has not
only proven it to be as one of the best funds on ELSS segment but throughout the
equity category. This is visible in its asset size of 17000crore. The fund has an
exposure of 30% midcap currently. The fund manager Jinesh Gopani has been
associated to the fund since 2011 has been outperforming its peers over the long
run. Though the fund suffered a setback during the last couple of years, its strong
fund management team and a well proven investment mandate strengthens it
fundamentally.

Risk meter
Level of Risk in the Scheme

Performance and changes in NAV

performance of Axis Long Term Equity Fund - Regular Growth as of December 31, 2020

Current value of Rs.10,000 invested

S&P BSE Nifty 50 TRI S&P BSE Nifty 50 TRI
Annualised( 200 TRI Additional Annualised( 200 TRI Additional
%) Benchmark Benchmark ₹) Benchmark Benchmark(
(%) (%) (₹) ₹)

Since inception
17.55% 11.02% 10.75% 59,367 31,625 30,794
29 Dec 2009
 5 Years 14.15% 13.27% 13.39% 19,393 18,661 18,754

3 Years 12.39% 9.45% 11.28% 14,209 13,122 13,790

1 Years 20.46% 17.87% 16.09% 12,052 11,792 11,614

Change in NAV since inception :-

Tata India Tax saving Funds :-

While seeking long term capital growth, Tata India Tax Savings Fund makes
investments of a minimum of 80% in equity and the remaining 20% in debt and
money market instruments. The fund has a total of around 98.38% invested in
Indian stocks, out of which 71.82% is invested in large cap, 10.99% in mid cap and
7.72% in small cap stocks.

The fund is an open-ended equity scheme attempting to catch the long-term upside
potential of the Indian equity market. The lock-in period of 3 years enables the
fund managers take a long term perspective and ensure stability in fund’s
performance.
The scheme seeks long-term capital growth. Investments in equity would be at
least 80 per cent of the corpus, while allocation to debt and money market
instruments can go up to 20 per cent.
Suitability to whom :-
Investors who are looking to invest money for at least 3 years and looking for
additional benefits of income tax saving apart from higher returns expectations. At
the same time, these investors should also be ready for possibility of moderate
losses in their investments and 3 year lock-in period.

Risk Factors :-

Performance :-
Since its inception in 1996, the TATA India Tax Saving Fund has outperformed its
category and benchmark on a number of occasions. The fund saw its best
performance between February 1999 and February 2000. In 2017 the fund
outperformed its category and benchmark, but due to heavy rallying in the markets
in 2018, it was not able to give the same performance. The TATA India Tax Saving
Fund outperforms its benchmark in investments cycles of at least 3 years, but
considerably outperforms the benchmark in investments cycles of 5 years or more.

Changes in NAV since inception :-

DSP Tax Saver :-

It has launched in 2007, follows a combination of growth and value-based
investing and keeps switching its style as per the market movements.
This tax-saving mutual fund has been one of the most consistent performing funds
in this category, and hence, it can be counted amongst the most reliable funds to
invest in.
The scheme seeks to generate medium to long-term capital appreciation from a
diversified portfolio that is substantially constituted of equity and equity related
securities of corporates, and to enable investors avail of deduction from total
income, as permitted under the income tax act.

Suitability :-
Investors who are looking to invest money for at least 3 years and looking for
additional benefits of income tax saving apart from higher returns expectations. At
the same time, these investors should also be ready for possibility of moderate
losses in their investments and 3 year lock-in period.
When you invest for five years or more, you can expect gains that comfortably beat
the inflation rate as well as returns from fixed income options. In addition, there is
a tax benefit. Under Section 80C of the Indian income tax laws, investments of up
to Rs 1.5 lakh in a financial year in eligible securities such as this fund are exempt
from tax.
But be prepared for ups and downs in your investment value along the way. Also
note that you cannot withdraw your money from this fund before completing three
years from the date of investment.

Analysis of Risk Factor :-

Riskometer

Performance and change in NAV (since inception) :-

Mirae Asset Tax Saver :-
Despite being relatively new in the category, launched in 2015, we have decided to
include Mirae Tax Saver in our seven best ELSS mutual fund slots because of two
reasons – First, since its inception,this tax-saving mutual fund has managed to beat
its benchmarks and the category average by a massive margin. It’s three-year
returns are about 5 percent higher than the category average. Second, it has
managed to contain its losses well enough during the market correction of 2018.
The fund invests 65 to 70 percent of its assets in large caps and rest in mid and
small caps. It has delivered 9.06% returns

Suitability to whom :-
• Investors who want to save taxes under Section 80C of income tax act 1961.
• Investors who aim for capital appreciation over a long investment horizon.
• Investors who have twin objectives – achieving long term goals while saving
taxes on investments made.
• Investors who can remain invested for minimum 3-5 years.
• Investors with can tolerate moderately high risk for their investments.

Risk Factors :-
Mutual fund investments are subject to market risks and there is no assurance or
guarantee that the objectives of the scheme will be achieved. As with any
investment in securities, the Net Asset Value (NAV) of the units issued under the
Schemes can go up or down depending on the factors and forces affecting the
capital markets. Investments in mutual funds are prone to risks of fluctuation in
NAVs, uncertainty of dividend distributions etc. Past performance of the Sponsor /
AMC / Mutual Fund / Trustee does not indicate the future performance of the
Schemes of Mirae Asset Mutual Fund. The sponsors are not liable or responsible
for any loss resulting from the operation of the fund beyond the initial contribution
made by them of an aggregate amount of Rupees One Lakh towards setting up of
the fund. Please read the respective Scheme Information Document for scheme
specific details. Unit holders in the Scheme are not being offered any guaranteed /
assured returns. A copy of SAI / SID / Key Information Memorandum cum
Application form will be available at AMC offices / AMC website
www.miraeassetmf.co.in / Investor Service Centre / Distributors on request.

Performance and change in NAV (since inception) :-

Kotak Tax Saver Fund :-

Kotak Tax Saver Fund was launched in 2005. The fund follows a flexi-cap
approach, which means that it is not biased towards any particular size of
companies.
In recent time, the fund has been increasing its allocation towards mid to small cap
companies. Currently, Kotak Tax Saver’s holding in mid to small cap companies is
about 45 percent. And, the rest 55 percent of its investment is towards large cap
companies.
Since launch the fund has delivered average annual returns of 9.57% while its
seven year returns are 9.99%.

Suitability to whom :-
Investors who are looking to invest money for at least 3 years and looking for
additional benefits of income tax saving apart from higher returns expectations. At
the same time, these investors should also be ready for possibility of moderate
losses in their investments and 3 year lock-in period.
When you invest for five years or more, you can expect gains that comfortably beat
the inflation rate as well as returns from fixed income options. In addition, there is
a tax benefit. Under Section 80C of the Indian income tax laws, investments of up
to Rs 1.5 lakh in a financial year in eligible securities such as this fund are exempt
from tax.
But be prepared for ups and downs in your investment value along the way. Also
note that you cannot withdraw your money from this fund before completing three
years from the date of investment.
Analysing Risk factors :-
Liquidity aspect of investments in the Scheme : The amount invested in the
Scheme shall be subject to a lock-in of 3 years, irrespective of whether the
investment would be eligible for tax benefit or not. The Liquidity risks of the
portfolio are also expected to be low, however, there being a 3-year lock in period,
the investors will not be allowed any redemption during this period. The portfolio
of the scheme will comprise predominantly of Equity and Equity Related
instruments and there would be Moderate to High risk on account of
PriceFluctuations and Volatility. Since this is not a sector scheme and plans to
invest generally in stocks across the market capitalisation, the Concentration and
Sector Risks are low.
The above does not constitute an advice or a representation. Investors are requested
to seek professional advice in this regard.
Performance and change in NAV (since induction) :-