(ELSS) Equity Linked Savings Schemes are tax-saving mutual funds in India that come with a 3-year lock-in period and the investor can redeem their fund after the lock-in period is over. To find the best ELSS mutual funds to invest in 2024, kindly read the whole article to understand all related things.
Compared to other mutual funds ELSS is the only Mutual Fund eligible for tax deductions under provisions of Section 80C of the Income Tax Act, 1961 where an investor can claim a tax rebate of up to Rs. 1,50,000.
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Advantages of Best ELSS Mutual Funds
Below are some advantages of investing in the best ELSS mutual fund in 2024
- Higher Returns
The first advantage of the best ELSS Mutual Funds is that ELSS funds receive higher returns from the market as they invest in equities and have a shorter lock-in period of 3 years. ELSS mutual funds offer higher returns than regular tax-saving options such as bank FDs or recurring deposits.
That is why ELSS funds give higher returns in comparison with other tax-saving options with shorter lock-in periods and tax rebates of upto 1,50,000.
- Tax Saving
Equity Linked Savings Schemes (ELSS) is an equity-based mutual fund that offers tax rebates of up to Rs. 1,50,000 and saves up to Rs. 46,800 in a year through taxes.
ELLS funds are the only mutual fund that offers tax deductions under provisions of Section 80C of the Income Tax Act, 1961.
- Diversification
Best ELSS Mutual funds invest in a diversified portfolio of equity stocks across different sectors and market capitalizations that help to reduce risk and result in generating better returns.
ELSS mutual funds invest in various equity stocks across different sectors to avoid the huge risk exposure concentrated in less number of funds.
- Lock-in period
ELSS mutual funds have the shortest lock-in period of 3 years in comparison with other Tax Saving options like the Public Provident Fund (PPF) and National Savings Certificate (NSC) and provide higher returns.
ELSS Funds have a mandatory lock-in period of three years which means you cannot withdraw your money from the ELSS mutual fund before the completion of three years.
- Investment options
There are two ways you can invest in Best ELSS Mutual Funds such as through the SIP Systematic Investment Plan and Lum – Sum method. SIP allows you to make a disciplined investment i.e. by paying a fixed installment in a regular interval of time that can be quarterly, monthly, or annually, and gain long-term returns on investment.
On the other hand, Lum – sum method allows an investor to invest money in ELSS Funds in one payment or in one go.
Disadvantages of Best ELSS Mutual Funds
- Lock in Period
ELSS Funds have a mandatory lock-in period of three years which means you cannot withdraw your money from the ELSS mutual fund before the completion of three years.
- Management Cost
ELSS funds are managed by a professional fund manager and in return the fund manager charges fees that make it costly. The fund management charges around 2.5% of the assets under management (AUM) per year.
- Higher Risk
The risk of investing in ELSS funds is Higher because ELLS funds are directly linked to the equity market and the equity market is based on market risk which means that an investor will suffer losses as a result of the market’s bad performance.
Market risk evolves around various factors such as political factors, recession, market sentiment and so on that have an adverse effect on stock market prices.
- Liquidity Risk
As there is a mandatory lock-in period of three years in ELSS funds, an investor cannot redeem or transfer its funds before the lock-in period is over. ELSS funds offer limited liquidity as there is a mandatory lock-in period of 3 years.
So, we can say that the above-mentioned points are the advantages and disadvantages of Best ELSS Mutual Funds.
Best ELSS Mutual Funds to invest in 2024
| FUND NAME | CATEGORY | RISK | FUND SIZE | RATINGS | 1YR Return |
| Quant Tax Plan Fund | Equity | Very High | ₹ 5,614 Cr | 5 Star | 25.8% |
| Quant ELSS Tax Saver Fund | Equity | Very High | ₹ 5,614 Cr | 5 Star | 34.1% |
| Bandhan Tax Advantage (ELSS) Fund | Equity | Very High | ₹ 5,160 Cr | 5 Star | 16.8% |
| Bandhan ELSS Tax Saver Fund | Equity | Very High | ₹ 5,402 Cr | 5 Star | 30.2% |
| Parag Parikh ELSS Tax Saver Fund | Equity | Medium | ₹ 2,137 Cr | 5 Star | 23.8% |
Now Let’s discuss the Best ELSS Mutual Funds which are listed in the above table:
Quant Tax Plan Fund
Quant Tax Plan Fund Direct-Growth is an equity mutual fund scheme launched by Quant Mutual Fund. It has Assets Under management (AUM) of ₹41,821 Cr.
The Fund size of the Quant Tax Plan Fund is ₹5,614 Cr and is allocated to various sectors like Energy, Health Care, Construction, Finance, Metal and mining, Services, and Technology.
The minimum investment in this fund is ₹500 for SIP and Lum Sum and it has given 34.96% annualized returns in the past three years and 30.25% in the last 5 years.
Quant ELSS Tax Saver Fund
Quant ELSS Tax Saver Fund Direct-Growth is an equity mutual fund scheme launched by Quant Mutual Fund. It has Assets Under management (AUM) of ₹41,821 Cr.
The Fund size of Quant ELSS Tax Saver Fund is ₹ 5,614 Cr. The minimum investment in this fund is ₹500 for SIP and Lum Sum and it has given 34.79% annualized returns in the past three years and 31.24% in the last 5 years.
Bandhan Tax Advantage (ELSS) Fund
Bandhan Tax Advantage (ELSS) Fund Direct-Growth is an Equity mutual fund scheme launched by Bandhan Mutual Fund. It has Assets Under Management (AUM) of ₹1,29,651 Cr.
The Fund size of Bandhan Tax Advantage (ELSS) Fund is ₹ 5,160 Cr and the risk associated with this fund is very high. The minimum investment in this fund is ₹500 for SIP and Lum Sum and it has given 28.88% annualized returns in the past three years and 18.62% in the last 5 years.
Bandhan ELSS Tax Saver Fund
Bandhan ELSS Tax Saver Fund Direct-Growth is an Equity mutual fund scheme launched by Bandhan Mutual Fund. It has Assets Under Management (AUM) of ₹1,29,651 Cr.
The Fund size of Bandhan Tax Advantage (ELSS) Fund is ₹ 5,402 Cr and the risk associated with this fund is very high. The minimum investment in this fund is ₹500 for SIP and Lum Sum and it has given 28.88% annualized returns in the past three years and 18.62% in the last 5 years. This Mutual Fund is rated 5 stars.
Parag Parikh ELSS Tax Saver Fund
Parag Parikh ELSS Tax Saver Fund Direct-Growth is an Equity mutual fund scheme launched by PPFAS Mutual Fund. It has Assets Under Management (AUM) of ₹ 54,460 Cr.
The fund size of Parag Rarikh ELSS Tax Saver Fund is ₹ 2,137 Cr and the risk associated with this fund is moderately high. The minimum investment in this fund is ₹500 for SIP and Lum Sum and it has given an annual return of 23.8%.
Hope you have got enough information on how to choose Best ELSS mutual funds to invest in 2024 and get the benefit of tax saving and return.
