A
HANDBOOK
OF
ELSS
2
A Handbook Of ELSS
PREFACE
Equity Linked Savings Scheme (ELSS) is extremely popular as an investment
option among the taxpayers and equity investors of India. It offers several
advantages, tax saving being just one of them. The investment experts also
recommend investing in ELSS as an important step in building a portfolio, because
it helps in wealth building in the long term. Needless to say, every taxpayer needs
to know what it is, how it compares to other tax saving instruments, and what are
the parameters to look at while investing in an ELSS.
Since its inception, Elearnmarkets has been at the forefront of providing financial
education in India. It was conceived by its founders for spreading financial literacy
in the country. Already more than 50,000 individuals have taken advantage of the
various courses and other educational resources it offers and it is reaching out to
more students, salaried employees investors, traders, housewives, retired persons,
etc. Every day to make a difference in how they manage and invest their money.
This guidebook on ELSS is another important resource that Elearnmarkets has
created for the people like you. It is written in a very simple language and even
a layman will be able to understand and appreciate the advantages and exciting
investment opportunity provided by ELSS by reading it.
We hope you enjoy reading this guidebook as much as we enjoyed creating it for
you. Your suggestions and feedback are always welcome. Let us know how we
can improve it further to make it suitable for as many investors as possible.
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A Handbook Of ELSS
Table Of Contents
Background For Tax Savings U/S 80C
04
Introduction And Features Of ELSS
07
Taxation of ELSS
10
How To Invest In ELSS - SIP Or Lump Sum?
12
Fund Options - Growth And Dividend
15
Advantages & Disadvantages Of Using Dividend Option
17
Comparison Of ELSS With Various Other Options U/S 80C
19
How To Select An ELSS Scheme
22
Fund Ratios. Performance Consistency And Fund Rating
26
Examples Of ELSS Schemes
31
Conclusion
34
About Us
36
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A Handbook Of ELSS
Chapter 1
Background
For
Tax Savings
U/S 80C
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Handbook of ELSS
Chapter 1
Background For Tax Savings U/S 80C
Income tax is a direct tax which every Indian who falls in the taxable bracket has to
pay to the Government of India every year. Irrespective of whether you are a
salaried individual, businessman, professional, etc. you need to plan your taxes
well. Unless you pay close attention to how you are spending and investing your
money, you can end up paying heavy taxes which can significantly reduce the
amount of money you will have left in your hand.
Thankfully, there are several legal and widely accepted ways in which you can
save tax without circumventing the rules of the country. If you have been paying
taxes for some time, you must have surely heard about Section 80C of the Income
Tax Act 1961, the governing law for income tax in India. This section aims at
promoting the habit of saving and investment among the taxpayers. It can provide
you with significant tax deductions if you invest wisely.
By investing in the tax-deductible instruments specified under this section, you can
save a significant amount of money by having to pay lower taxes.
So let us take a closer look at section 80C and how it can help you to save taxes.
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Handbook of ELSS
Section 80C
Section 80C of the Income Tax Act 1961 simply says that if you invest in one of
the several approved investment products/instruments listed in it, you can claim a
lump sum deduction from your total taxable income. Thus the amount of your
income that will be subject to tax will be lower, resulting in lower tax payable
As of now, the maximum amount of deduction that can be claimed stands at Rs. 1,
50, 000 (as of Financial Year 2017 - 18).
The deduction under section 80C is however only applicable for individuals and
Hindu Undivided Families (HUF) and not for the other assessees.
Thus, by investing in the following tax-deductible instruments specified under
Section 80C, you can save a significant amount of money as you will have to pay
lower taxes:

Equity Linked Savings Scheme (ELSS) Funds Public Provident Fund (PPF)

Employee Provident Fund (EPF)

Tax-Saving Fixed Deposits (FD)

National Pension System (NPS)

National Savings Certificates (NSC)

Unit Linked Insurance Plans (ULIP)

Sukanya Samriddhi Yojana

Senior Citizens Savings Scheme (SCSS)
These investments are very different from each other in terms of structure,
investment horizon and risk profile. Similarly, the returns that you can get can also
vary significantly.
Hence it is important that you choose your investment options carefully and try to
get the best returns from them as per the amount of risk that you are willing to take.
Hence, by investing in a tax-deductible instrument under Section 80C, you can
earn good returns apart from saving taxes when you invest in them.
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A Handbook Of ELSS
Chapter 2
Introduction
And
Features Of
ELSS
8
A Handbook Of ELSS
Chapter 2
Introduction And Features Of ELSS
Among all the Sec 80C instruments, Equity Linked Savings Scheme (ELSS) funds
are by far the most popular among the investors looking for getting some high
returns from equity apart from tax savings. As of November 2017, the total current
investments (AUM) of ELSS funds were Rs 76, 897 crores.
So what is an Equity Linked Savings Scheme anyway?
ELSS is a special category of equity mutual funds which offer the dual benefits of
tax saving and capital gains to the investors. They carry a lock-in period of 3 years,
which is mandated under section 80C. Once you invest in an ELSS, you will not be
able to withdraw the amount before the expiry of 3 years.
Now you must be thinking that the lock-in period of 3 years is too long and your
money will get blocked till then. This is, in fact, a good thing for the following
reasons:
Firstly, in a regular open-ended equity mutual fund, the fund manager always
needs to keep some part of the corpus idle to pay the investors who redeem the
mutual fund on a daily basis. Since redemption can happen on any day, generally
anywhere between 5 to 10% of the total corpus of the fund is kept idle. This means
that this portion of the corpus does not earn any returns and is similar to a nonproductive asset for the investors.
The lock-in period of 3 years in an ELSS means that the fund manager is not
obligated to meet any redemption requests, at least in the first 3 years of the
existence of the fund. He can, therefore, invest a larger proportion of the fund,
thereby earning higher returns for the investors
Secondly, ELSS promotes long-term saving habits. Since the investment is subject
to a compulsory lock-in, even if you have the urge of redeeming
the investment when it starts yielding short-term gains, you cannot take the
money out for at least 3 years. Thus purchasing the units of an ELSS scheme is
a great way to invest for the long term. It can certainly give you good capital gains
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A Handbook Of ELSS
9
when the markets do well.
Some of the important features of an ELSS are:
An ELSS is a type of mutual fund.
It is an equity mutual fund, so most of its corpus is invested in shares.
All ELSS funds carry a compulsory lock-in period of 3 years. You can
not withdraw your investment before the expiry of this period.
You can get a tax benefit of up to Rs. 150000 by investing in an ELSS.
Though the tax benefits are kept at the levels already mentioned, there
is no limit to how much you can invest in ELSS.
Since the majority of the corpus is invested in equity, ELSS carries or
risk profile similar to that of shares
ELSS is a long-term investment. So, you can gain a high rate of return
provided the markets do well in this period.
There are both dividend and growth options available. You can choose
the option that suits you the most at the time of investment
In India, any investment in an equity fund made for more than 1 year is
considered to be a long-term investment, which is not subjected to tax.
Hence, the amount that you will receive when you redeeming the
investment after 3 years will tax-free in your hands.
One point that you have to keep in mind always is that just like in case of equity
shares, ELSS funds are also subject to market volatility. When the markets do well,
ELSS will give you good returns since the prices of the stocks in which it has
invested will increase, and vice-versa.
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A Handbook Of ELSS
10
Chapter 3
Taxation
of
ELSS
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A Handbook Of ELSS
Chapter 3
Taxation of ELSS
Till Financial Year 2017-18, all earnings from ELSS were tax-free in the hands of
the investor. However, the Union Budget of 2018 has introduced a new long-term
capital gains tax and dividend distribution tax on all ELSS funds.
Hence, you will be subject to the following taxes, if you invest in ELSS after April
1 , 2018:
A.10% on all dividends that you will receive from the ELSS
B.If you hold the ELSS for more than 1 year and then sell it, then you will have to
pay 10% of the profits (Long-term Capital Gains) that you earn beyond Rs 1 lakh
as tax.
Thus, any long term capital gains of upto rs 1 lakh is tax free, and only what you
earn beyond rs 1 lakh is going to be taxed at 10%. It is important to note that this
limit of 1 lakh is computed by summing up the long term capital gains that you
have earned from all your equity investments, and not just of the ELSS scheme.
Let us understand this with an example:
Mr. Jacob earns Rs. 2 lakh in of long-term capital gains from all his stock and
mutual fund investments in 2018-19. However, the long-term capital gains from his
ELSS investments is Rs 75,000 only.
His long-term capital gains tax will be calculated on Rs 2, 50, 000 and not just Rs.
75, 000. The tax payable by him will be calculated as follows:
 Long-term capital gains: Rs 2, 50, 000
 Less: Deduction: Rs 1, 00, 000
 Taxable amount: Rs (2, 50, 000 - 1, 00, 000) = Rs 1, 50, 000.
So the long-term capital gains tax payable by him will be 10% of Rs 1, 50, 000, i.e.
Rs 15, 000.
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A Handbook Of ELSS
Chapter 4
How To
Invest In ELSS
SIP Or
Lump Sum?
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A Handbook Of ELSS
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Chapter 3
How To Invest In ELSS - SIP Or Lump Sum?
ELSS gives you the option to either make lump-sum investments or to invest
through a Systematic Investment Plan (SIP). Let us now understand the
advantages and disadvantages of each of these modes of investment.
Lump sum investment: Many investors go for investing in ELSS in
a lump sum. Since these funds can get them good tax savings, they
try to quickly invest in ELSS in the last 3 months of the financial
year, especially if they have not done the section 80C investments in
the first 9 months of the year. This can often be dangerous,
especially if the markets are very high when the investment is made.
Since the investment is generally made in a single transaction, the entire
purchase happens at a high rate. If the markets come down after this, the
investment starts yielding losses. Mutual funds experts say that lump sum
investment in ELSS is ideal only for those who are investing for a really long term
like 10 years.
Systematic investment plan: Investing in an ELSS through a SIP
is the ideal option for most investors, especially the small ones.
These are beneficial for many reasons:
Since the investments are staggered over the entire year, the
purchases of the ELSS units happen at different prices (NAV). In this way, the
cost of investment gets averaged out and you do not end up getting stuck at a
very high rate.
Systematic Investment Plans, as the name suggests, require you to invest
systematically on predefined dates. This promotes the habit of disciplined
investing, which is much better than investing sporadically and haphazardly.
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A Handbook Of ELSS
Because of these obvious benefits, it is highly recommended to go for a SIP in
ELSS instead of investing in a lump sum.
One thing you need to remember here: In case of a SIP, every investment will be
subject to a three-year lock-in. That means that the three years will be calculated
from the actual date of each installment, and not from the date on which the first
installment was paid.
For example, if you invest rupees 1000 every month in an ELSS for six months,
the lock-in will be calculated as follows:
Date of investment
Amount (Rs.)
Lock-in period ends on
July 1, 2017
1000
June 30, 2020
August 1, 2017
1000
July 31, 2020
September 1, 2017
1000
August 31, 2020
October 1, 2017
1000
September 30, 2020
November 1, 2017
1000
October 31, 2020
December 1, 2017
1000
November 30, 2020
Which one to choose?
If you are looking for periodic payouts from the ELSS fund, then you must choose
the dividend option. It is ideal when you either need the dividends to meet your
spending obligations or want to invest the returns in some other fund and not the
same ELSS again.
The growth option is ideal for those who are looking for building their wealth. This
option offers the benefit of compounded returns. Hence, if the markets if the
markets perform well during your holding period, then the amount that you can get
upon redemption can be substantial. Go for this option if you are not in the need of
regular payouts of the returns that you earn.
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A Handbook Of ELSS
Chapter 5
Fund Options
Growth
And
Dividend
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A Handbook Of ELSS
Chapter 5
Fund Options - Growth And Dividend
Like all other equity mutual funds, ELSS also offers the growth and dividend
options to the investors. You can choose either of the following at the time of
investing in an ELSS.
Growth option: When you choose the growth option, you allow the
mutual fund house to further invest the returns that you earn to
generate more returns. In other words, you allow the fund house to
reinvest your returns for generating compounded returns. When
you redeem the amount at the end of the lock-in period or
sometime later, your entire investment along with the returns is paid out to you.
Dividend option: If you need the returns to be paid out to you
periodically in the form of dividends, then you must select the
dividend option. In this case, your returns are not reinvested but
paid out to you whenever a dividend is declared by the fund house.
One thing to remember is that unlike in other equity mutual funds, the dividend
reinvestment option is not available in case of an ELSS. They were some
procedural problems because of which the Association Of Mutual Funds Of India
(AMFI) discontinued this option in 2015.
Which one to choose?
If you are looking for periodic payouts from the ELSS fund, then you must choose
the dividend option. It is ideal when you either need the dividends to meet your
spending obligations or want to invest the returns in some other fund and not the
same ELSS again.
The growth option is ideal for those who are looking3 for building their wealth. This
option offers the benefit of compounded returns. Hence, if the markets if the
markets perform well during your holding period, then the amount that you can get
upon redemption can be substantial. Go for this option if you are not in the need of
regular payouts of the returns that you earn.
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A Handbook Of ELSS
Chapter 6
Advantages
&
Disadvantages
Of Using
Dividend Option
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A Handbook Of ELSS
Chapter 6
Advantages & Disadvantages Of Using Dividend
Option
As already mentioned earlier, the main advantage of the dividend option is that
you can get regular periods if the ELSS performs well. You can use this amount in
any way that you want.
On the flip side, you will not get the advantage of compounding of your
investments if you use this option. The fund house will deduct the value of the
dividend payout from the NAV whenever the dividend is actually paid out to you.
This deduction doesn't happen in case of the growth option since no dividend is
paid out.
Hence, when you check the NAVs, you will find that the NAV of the dividend option
of an ELSS is less than that of the growth option. Let us take an example to
understand why this happens:
Suppose there is a fund which is declaring dividends for the first time. Before
declaration, the NAV of both options will be same. However, once the dividend is
paid out, the NAVs will become different.
Growth option (Rs)
Starting NAV
Dividend declared @ Rs 2
Ending NAV
Dividend option
(Rs)
20
20
-
(-) 2
20
18
Hence, choose the growth option if you are really interested in building wealth and
have no problems in keeping the entire amount (initial investment + returns) in the
fund throughout your holding period.
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A Handbook Of ELSS
Chapter 7
Comparison Of
ELSS
With Various
Other Options
U/S 80C
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A Handbook Of ELSS
Chapter 7
Comparison Of ELSS With Various Other
Options U/S 80C
Let us now take a brief look at a comparison of the investment options approved
under section 80C.
Guaranteed
Returns
Investment
Risk Profile
Interest
Lock-in Period
ELSS funds
Equity-related risk
12-15% (expected) No
3 years
PPF
Risk-free
7.8%
Yes
15 years
NPS
Equity-related
8-10% (expected)
No
Till retirement
NSC
Risk-free
7..8%
Yes
5 years
FD
Risk-free
7-9% expected
Yes
5 years
ULIP
Equity-related risk
8-10% expected
No
5 years
Sukanya
Samriddhi
Yojana
Risk-free
8.3%
Yes
21 years
SCSS
Risk-free
8.3%
Yes
5 years
Source: Cleartax.in
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A Handbook Of ELSS
As you can see, the Equity Linked Saving Schemes (ELSS) have traditionally
given the highest returns among all the tax saving instruments that are included in
section 80C. No wonder that these are very popular among the taxpayers. Every
year crores of rupees are invested in ELSS by them, especially during the tax
saving seasons of December to March.
Do not get confused between an ELSS and ULIP
A word of caution here: Many investors sometimes get confused between an
ELSS and Unit Linked Insurance Plan (ULIP). While both of them offer tax
deduction under section 80C, they are completely different from each other in
terms of their product features and risk-return profiles.
Here are certain differences which will help you to distinguish between the two:
 ULIP is an insurance product offered by insurance companies while ELSS is a
mutual fund.
 ULIP is a hybrid product, offering features of both insurance and investment.
ELSS is a pure investment product which does not provide any insurance
coverage.
 ULIPs generally deduct a hefty amount from the amount invested as various
charges like fund management expenses, life insurance charges and various
administrative fees. Whatever amount remains after this deduction is invested in
the equity markets. However, in the case of ELSS, the entire amount gets
invested in the equity markets without any deductions.
 Though ULIPs can offer an expected return of 8 to 10%, the time taken to
generate the returns is much longer than that of ELSS. This is because the
investor starts getting returns only after the initial charges that what deducted by
the insurance company are recovered.
 While the performance of ELSS funds is quite easily understandable, it is often
notoriously difficult to understand how the ULIPs behave. In the past, countless
investors have complained about not getting satisfactory returns from a ULIP
even when the markets have performed well.
Many investment advisers may try to sell you ULIPs disguising them as equity
investment products. We recommend you to choose an ELSS if you only want to
invest in the equity markets and do not need any insurance cover. Do not invest in
a ULIP just for saving tax u/s 80C.
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A Handbook Of ELSS
Chapter 8
How To
Select
An
ELSS Scheme
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A Handbook Of ELSS
Chapter 8
How To Select An ELSS Scheme
Selecting the right ELSS scheme is extremely important since investing in the
wrong ELSS scheme can be quite dangerous. Here are some of the factors that
you must check before deciding the best ELSS in which you can invest.
Remember, that spending some time and effort in doing careful research before
investing can help you to choose the winning funds that are also expected to
perform well in the future.
Caution:
All investment in equity shares and equity Mutual Funds, including ELSS
investments are subject to market risk. However well you research, there is always
a possibility that the fund you choose may not perform as per your expectation if
the stock markets do not
do well. Keeping this factor aside, by doing careful research, we can, however,
evaluate the health of a fund and try to pick the best performers in which we can
invest.
Doing a solid research is very important, but it can never guarantee profits.
1. Asset Under Management
The thumb rule is that you should invest in an ELSS which has a large Asset
Under Management (AUM). When a fund manager has a large corpus to invest,
then he can make robust decisions and draw up better strategies to generate
returns. A fund with a low AUM will not give this flexibility to the fund manager and
he will have to work under severe constraints.
Another big risk of investing into an ELSS with low AUM is that in case a big
investor exits from the fund, then the stability of the ELSS will be at stake. The
AUM will become even smaller in that case. Since you are locked in for 3 years,
you will not be able to exit from it, resulting in unnecessary losses for you.
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A Handbook Of ELSS
2. Performance ranking
Most investors only look at the returns generated by the fund in the short and the
long terms while purchasing and ELSS. While that is important, it is also very
important to look at how the ELSS compared to its peers in terms of performance.
This is where performance ranking comes in.
Every ELSS is assigned a Quartile ranking depending on their relative
performance visa we all the other funds. They are classified into four Quartiles
numbered 1 to 4. The top performers as classified in Quartile 1 and the worst
performers are classified as Quartile 4.
Needless to say, always try to invest in the funds belonging to the top Quartiles, i.e.
1 and 2. Avoid choosing the low performers classified in Quartiles 3 and 4.
3. Ratio analysis
Evaluating the Fund Ratios will help you to find out how an ELSS is performing
based on certain preset parameters. While investing in an ELSS it is very
important to look at these ratios to understand whether the fund is worth investing
in or not.
Some of the common ratios that will help you to understand the risk and return
potential all the funds better are Standard Deviation, Sharpe Ratio, Treynor Ratio,
etc.
You can easily find the current ratios from the websites of the respective Mutual
Fund companies and of many other research sites like Mutualfundindia.com,
Moneycontrol.com and Valueresearchonline.com.
We will discuss the ratios in detail in the next chapter.
4. Total expense ratio
The total expense ratio is one of the most important ratios for any investor. It will
tell you what percentage of the profits from the ELSS are being used to meet the
management, administrative and distribution expenses of the fund. It is calculated
as:
Total expense ratio = (Total Expenses Of The Fund) / (Total Assets Of The
Fund)
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A Handbook Of ELSS
25
The higher the Total Expense Ratio, the lower will be the return that you earn.
Hence it is important that you choose a fund which has a relatively lower total
expense ratio.
5. Fund manager’s performance
The fund manager is the captain of the ELSS ship, and it is he who takes most of
the decisions regarding the investments that the fund makes. Hence it is very
important that the fund manager is strong and well experienced.
Before investing in an ELSS, do some research regarding the fund manager. Try to
know his/her qualification, experience, track record, etc. Try to evaluate the
performance of the other funds that he/she might be handling, and look out for any
signs of an outstanding performance by any of those funds.
The fund manager’s performance can also be found out by looking at a fund ratio
called Alpha. This will tell you the extra returns that the fund manager has been
able to generate over and above the average industry returns. A fund manager who
has been able to generate a high alpha is considered to be better than another one
who has just generated the industry average returns.
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A Handbook Of ELSS
26
Chapter 9
Fund RatiosPerformance
Consistency And
Fund Rating
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A Handbook Of ELSS
27
Chapter 9
Fund Ratios- Performance Consistency And
Fund Rating
Let us now look at some numerical indicators that you can use evaluate a fund and
compare different investment options that you have. These indicators are Ratios,
Performance consistency and fund ratings.
A. Fund Ratios
1. Standard deviation
Standard deviation is a widely accepted measure of risk. It will tell you how risky
the fund is, i.e. What is the chance that the fund will not be able to generate the
expected returns in the future.
How to evaluate:
It is always better to choose a fund with low standard deviation.
2. Beta:
Beta is widely accepted as a measure of the volatility of the funds. It will give you
an idea of how much volatility in the ELSS fund returns you can expect when the
markets move up or down.
Funds with a Beta of 1 are expected to move exactly in the same way as the
market moves. Those with the Beta of more than 1 will witness higher volatility
than the market. Those with a Beta of less than 1 have a lower volatility than the
market.
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A Handbook Of ELSS
28
For example, if the market moves up or down by 100 points, then the stocks with
different Beta will move as follows:
Low
Beta
Market Movement
Conservative
(points)
(Beta = 0.8)
-
At Par (Beta = 1)
High Beta - Aggressive
(Beta = 1.2)
+ 100
+80
+100
+120
- 100
-80
-100
-120
How to evaluate:
 If you are a conservative investor then choose a volatility less than 1.
 If you want the ELSS to generate returns in line with the market returns, then
choose a fund with Beta of 1
 However, if you have the appetite for higher risk and want high returns, then
you should choose an aggressive ELSS which has a Beta greater than 1.
3. Sharpe Ratio
Sharpe ratio measures the risk-adjusted returns generated by a fund. Higher
Sharpe ratio means that you are getting better returns vis-a-vis the risk that you
are taking.
Sharpe ratio is calculated as:
Sharpe ratio = (Average Returns Generated By The Fund – Risk-Free Rate) /
Standard Deviation Of The Returns Of The Fund.
How to evaluate:
You should look for funds with higher Sharpe ratio as they will give you better
returns compared to the risk that you would be taking by investing in them
Treynor ratio
Treynor ratio is another risk-adjusted measure of the returns generated by a fund.
While Sharpe ratio uses standard deviation as a measure of the risk, Treynor
ratio uses Beta.
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29
8
Treynor ratio is calculated as:
Treynor Ratio = (Average Fund Return – Risk-Free Rate) / Beta Of The Fund
How to evaluate:
You should look for funds with higher Sharpe ratio as they will give you better
returns compared to the risk that you would be taking by investing in them.
B. Performance Consistency Of ELSS
All investors should look at the track record of the ELSS to determine how
consistent their returns are. It is always important that you choose a fund which
has generated consistent returns year on year. The funds whose returns are not
very consistent are the ones who earn huge returns in one year when the markets
are favorable and struggle to generate any returns when the markets are bad. It is
very risky to invest in an ELSS whose returns are highly volatile.
Hence you need to look at the past performance of the ELSS to understand their
track record. Now one common mistake that most investors make is that they
look at the returns of the past 1 or 2 years to determine whether the fund is good or
not. This is the wrong way of checking the performance consistency of ELSS.
Since ELSS investment is a long-term one, always try to check the 3-year and 5year returns. If the fund has been in existence for many years then you can also
check the returns generated by the fund since its inception. This will give you a
better idea of its performance consistency and will give you an idea about what to
expect in the future, provided the market does not crash. It is a great way to
choose the best fund from the plethora of ELSS that are available in the market
today.
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A Handbook Of ELSS
30
C. Fund Rating
Many independent agencies compare the performance of the funds and assign
ratings to them. While investing in an ELSS you should look at these fund ratings
to identify the top performers. Since fund rating is done by third party agencies like
Value Research and CRISIL, these are considered to be authentic and reliable by
the investors.
The ratings that are given by Value Research range from 5 stars to 1 star. They do
separate ratings based on the 3-year returns and 5-year returns of the funds and
then arrive at a composite rating for each fund. If any fund has been in existence
for less than 3 years or has an AUM of less than 5 crores, then is not rated.
CRISIL on the other hand does mutual fund ranking. They consider portfolio and NAV
based parameters of the funds for deciding on the rankings. They also consider asset
quality, risk-adjusted returns, liquidity, etc. of each fund.
Before investing in the ELS you need to compare the funds based on their ratings
and rankings. This will help you to avoid choosing the wrong funds which can
prove to be a costly mistake.
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Chapter 10
Examples
Of
ELSS Schemes
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Chapter 10
Examples of ELSS Schemes
In the previous chapter, we discussed how to understand the risk-adjusted returns and
performance of the ELSS funds. Let us now look at some the top performing ELSS funds
and the ratings that have been assigned to them by Value Research. This will make it
easier for you to understand how the data is presented.
Please note that these examples are for illustration only , and we are in no way
recommending you to invest in these funds .
A. Tata India Tax Savings Fund
1. Returns
Value
Research
Rating
5 Star
Launch
Mar-96
3-Years
Return
(%)
5-Years
Return (%)
10-Years
Return (%)
Expense
ratio (%)
Net Assets
(Cr)
18.59
21.09
10.21
2.46
981
2. Ratios:
Fund Risk
Grade
Standard Deviation
Sharpe Ratio
Beta
Alpha
Below
Average
15.1
0.88
0.99
10.94
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B. Aditya Birla Sun Life Tax Relief 96
1. Returns
Value
Research
Rating
Launch
3-Years
Return (%)
5-Years
Return (%)
10-Years
Return (%)
Expense
Ratio (%)
Net Assets
(Cr)
5 Star
Mar-96
17.23
21.81
8.4
2.32
4,349
2. Ratios :
Fund Risk
Grade
Standard Deviation
Sharpe Ratio
Beta
Alpha
Low
13.38
0.87
0.86
9.65
C. DSP BlackRock Tax Saver Fund
1. Returns
Value
Research
Rating
Launch
4 Star
Jan-07
3-Years
Return (%)
5-Years
Return (%)
16.35
10-Years
Return (%)
20.34
10.34
Expense
Ratio (%)
Net Assets
(Cr)
2.51
3,571
2. Risk Ratios
Fund Risk
Grade
Average
Standard Deviation
14.5
Sharpe Ratio
0.72
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Beta
0.99
Alpha
8.2
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Conclusion
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Conclusion
Equity Linked Saving Schemes have been popular tax saving investments for many
years now, and its popularity continues to grow every year. The solid advantages that it
offers, including tax saving and opportunity to gain high returns, are the reasons for this
popularity.
An ELSS can be purchased very easily like any other mutual fund, either online through
the website of the mutual fund or the distributors, or in the traditional offline way by filling
up a form and issuing a cheque. This hassle- free way of investing and redeeming will
enable you to invest and redeem the fund quickly once the lock-in period is over. This is
another reason why people love ELSS.
So, go ahead and choose the best tax saving mutual fund (ELSS) for yourself, and get
the opportunity to build wealth by staying invested in the fund for the long term.
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About Us
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Kredent Academy
Kredent Academy is an unique concept where financial market professionals have
taken the onus of creating a strong knowledge bank in their area of expertise by bridging
the gap between theory and practice and by incorporating the practical mode of imparting
training.
Kredent Group with its strong background in Indian financial services is well suited to
offer practical oriented, real time learning courses on the capital market for the relevant
candidates. Whether one is considering taking his/her career to the next level or
enhancing existing skill sets or expanding the personal knowledge base, Kredent
Academy through its scientifically designed courses can help one achieving these goals.
Kredent Academy
was formed in January 2008 and since then has trained over 10000 students and has
been part of life changing experience of many.
Contact Us:
http://www.kredentacademy.com
+91 9748 222 555
info@kredentacademy.com
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Elearnmarkets
Elearnmarkets.com is a young and vibrant company established with the vision of taking
online financial education to a new level, both in India and abroad.
It has over 60,000 users and over 100 online courses on various aspects of finance like
stocks, stock markets, derivatives, currency markets, mutual funds, personal finance.
For the benefit of the learners, the courses are offered in English, Hindi and other
vernacular languages. They a;so get the option to choose from multiple learning formats
like Live-Interactive Program and Instructor-Led Recorded Programs, which are
constantly being enhanced through regular webinars and various online financial tools.
To make the students job ready, Elearnmarkets offers various career and knowledge
oriented recorded and online live programs in association with NSE Academy, NCDEX
Institute of Commodity Markets and Research (NICR) and MCX.
Contact Us:
https://www.elearnmarkets.com
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info@elearnmarkets.com
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StockEdge
Since you are new to investing in the market, you can take advantage of the StockEdge
mobile app. You can simply download this app on your phone and learn about the market
movements, latest financial information of all the listed companies, technical analysis and
derivatives on the go. All the information is presented in a simple graphical manner
using the charts and bars which make it perfect for the new entrants to absorb the
information easily.
You can view the stocks across the various industries or sectors and mark your preferred
stock as “favourite” to constantly monitor them without having to put in a lot of effort. This
app is also equipped with the various tools to help you analyse and track the latest
market trend. Also, do check out the latest tutorials in the app which will help you in
learning about investing in the market.
By providing complete trading resources under one platform, this a perfect app for the
investors, traders as well as analysts.
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A Handbook Of ELSS
The End
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