People mainly look for tax rewards whilst generating any investment and ELSS is one of the most well known choices in the mutual fund category that gives tax rewards.
For investments created in ELSS, a deduction up to Rs 1.5 lakh is permitted below Section 80C. These equity-linked saving schemes come with a lock-in period of 3 years, which is lesser when compared to other tax-saving instruments. Being a diversified equity mutual fund it also serves the goal of lengthy term capital development along with tax-saving rewards.
In ELSS investors have the flexibility to invest either by way of SIP or by generating lump sum investments. Experts say a low lock-in period, capital appreciation possible and tax rewards have created ELSS one of the preferred tax saving investment choices in current occasions.
Harsh Jain, Co-founder and COO, Groww, says, “ELSS is one of the most popular equity mutual funds categories. From January 2020 till March 2021, almost 20 per cent of the investors on Groww chose ELSS. Of the total assets under management for equity schemes, 17 per cent was allocated to ELSS.”
Here are some other observations with regards to trends in ELSS investments on Groww
Preferred mode of investment: 15 per cent of investors in the age group of 25-40 invested in ELSS funds, and whilst they showed a slight preference for lumpsum investments (41 per cent), a sizable percentage also chose to invest in ELSS by way of the SIP route (38 per cent). On the contrary, as higher as 54 per cent of the investors above the age of 40 chose lump sum as their preferred mode to invest in ELSS.
Industry professionals say, the causes behind the investment pattern shown by investors in the 25-40 year age group, could be due to elevated awareness about ELSS as a solution and rewards of investing in equity funds by way of SIP, along with higher monetary discipline. Data from Groww shows that the typical quantity invested by an ELSS investor on the platform was Rs 43,000.
Month on month trend: Month on month information from Groww states, that the interest in ELSS peaks in the 1st quarter of the year. In January, February and March, ELSS transactions are 41.6 per cent more than the transactions in ELSS taking place about the year. The purpose behind the surge in ELSS investments in the 1st quarter of the year could be the tax-saving proof submission deadlines that organisations impose, the tax-saving deadline getting March 31.
Top ELSS funds as selected by investors
Fund Name |
1 Yr Absolute Returns* |
3 Yr CAGR# |
5 Yr CAGR# |
Axis Long Term Equity Direct Plan-Growth |
21.22% |
15.65% |
16.44% |
Mirae Asset Tax Saver Fund Direct-Growth |
23.37% |
18.83% |
22.45% |
Aditya Birla Sun Life Tax Relief 96 Direct-Growth |
16.29% |
8.96% |
13.84% |
Canara Robeco Equity Tax Saver Direct-Growth |
28.30% |
18.51% |
17.51% |
Tata India Tax Savings Fund Direct-Growth |
13.31% |
12.51% |
15.70% |
- Top tax saving funds as selected by investors on Groww (January 2020 till March 2021)
- #: Returns as of March 25, 2021 *December 31, 2019, to December 30, 2020
Harsh says, “While lump sum is the preferred mode to invest, investors are also seen opting for SIP route to invest in ELSS funds especially in the 25-40 years age group.” He additional adds, “It is important to note that ELSS is like any other equity fund and investing periodically helps one cultivate financial discipline and reap benefits of rupee cost averaging. As awareness around ELSS as a product increases, more investors invest in ELSS mutual funds methodically as opposed to making last-minute investments.”