Higher beta indicates that the ELSS fund’s returns are volatile than the index returns. A higher standard deviation of an ELSS means that the return of the fund can vary highly in both positive and negative direction, as compared to it average return over a period.Beta indicates how much a fund’s returns can vary as compared to the benchmark index. A critical part of the selection process was the use of financial ratios for quantitative analysis.For analyzing the volatility of returns, Standard Deviation and Beta have been used.Standard Deviation indicates how much a fund’s return can deviate from its own historical mean return.However, less expense ratio doesn’t always translate into higher returns because there are many other factors that influence the returns. Lesser the expense of managing the fund, greater the possibility of high returns. Expense Ratio of the funds was also an aspect that was considered to shortlist the fund.It is always best to choose the growth option as in the dividend option, the dividend is given by booking profits from the assets held of the fund. Regular plan with growth option has been chosen for analysis.A fund which has given good returns over a longer period implies that it has weathered many bullish and bearish market cycles and has performed on par or better than the index. As a first step, we shortlisted those funds which have given the highest returns over a period of 5 years.We have applied the below criteria to do an in-depth analysis of all the ELSS funds and arrive at the top 5 funds. The fund selection process should not focus only on the returns generated by a fund but also on the qualitative factors like asset allocation and quantitative factors like expense ratio, beta, Sharpe ratio etc. Dividend Reinvestment option is not available, also there are no entry and exit loads for ELSS. Though equity is known to give the best returns in the long-run, there is always an inherent risk that is associated with it.ĮLSS offers options to invest in Growth or Dividend schemes only. Redemptions from ELSS funds after the lock-in period, are subject to Long Term Capital Gains (LTCG) tax at the rate of 10% of the gains that is above Rs.1 lakh.ĮLSS is a diversified, equity scheme and hence, its performance will depend on the stock market performance. Investments in ELSS are eligible for tax deduction under Section 80C up to a maximum of Rs.1,50,000.
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However, this has the shortest lock-in period among all the tax-saving instruments. After the lock-in period, you can either redeem the units or continue to hold it as long as you want it.
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If you are investing through SIP, every SIP in locked for 3 years. Investments in ELSS have a minimum lock-in period of 3 years. You can invest in ELSS through Systematic Investment Plans (SIP) or as a lump sum. It is not just one of the best tax-saving options, but also an excellent option for long-term investment.ĮLSS is a diversified, open-ended equity mutual funds, which comes with a lock-in period of 3 years. Check out the list of top 5 ELSS Mutual FundsĪmongst all the tax-saving instruments available in the market, Equity Linked Savings Scheme (ELSS) is one of the popular and preferred one.