How are the 3 biggest ELSS or tax saving funds performing?The tax-saving season is on. With many employers asking staffers to submit tax-related documents within January 31, investors are in a rush to make tax-saving investments that can be shown as proof for claiming tax benefits. Investments in tax-saving funds or ELSS (Equity Linked Saving Schemes) can help you reduce your taxable income under Section 80C. With investors looking at the popular ELSS funds while planning to invest, there is a need for objective analysis and review of such funds. This is why RupeeIQ takes a look at the three biggest tax-saving funds. Read on.

1. Axis Long Term Equity Fund

This is the biggest ELSS fund with investor assets worth over Rs 17,600 crore. While this is the biggest fund, this fund is not the oldest one. In fact, the scheme was launched in December of 2009. However, the fund, managed by Jinesh Gopani, has grown extremely fast and attracted investors, thanks to its good performance.

Let us look at the fund performance of Axis Long Term Equity Fund. We will look at the fund performance in two ways: for lump sum (for one-time) mode and SIP (Systematic Investment Plan) mode.

As on January 2, 2019, Axis Long Term Equity Fund posted a 1-year gain of 2.93% compared to a category average of -6.3%. Clearly, the fund has done well – better than most peers in last one year. Over the 3-year period, the fund has given 11.4% annual return versus category average of 10%. This also shows better than average performance. Over the 5-year period (ended Jan. 2, 2019), the fund has generated 20% gain annually compared to 16% category average gain. So, Axis Long Term Equity Fund has shown better than category lump sum returns across various time-periods.

Next, let us look at how the biggest ELSS fund has performed in terms of SIP. SIP is very popular these days. Many investors prefer to use the SIP route. The 1-year, 3-year and 5-year SIP returns of Axis Long Term Equity Fund show that the scheme is always in the top five to six funds across time-periods. This shows that it retains its superlative performance in the SIP mode as well.

We would also like to add that the fund appears to be among the cheapest 10 ELSS schemes given its expense ratio of 2.08%.

Axis Long Term Equity Fund
Lumpsum Performance
YTD 1-Month 3-Month 1-Year 3-Year 5-Year
Fund -0.76 0.02 2.36 2.93 11.4 20.02
Category -0.76 0.03 0.22 -6.36 10.08 15.97
Rank within Category 23 22 4 2 9 2
Number of funds in category 35 35 35 35 33 29
SIP Performance
1-year 3-year 5-year
Fund -0.68 11.14 12.66
Rank within Category 6 2 3
Number of funds in category 35 32 28

2. Reliance Tax Saver (ELSS) Fund

This ELSS fund from Reliance Nippon Life AMC stable is the second biggest in its category. The fund has amassed investors assets worth nearly Rs 9,900 crore. The fund has track record of over 13 years as it was launched in September 2005.

From a performance point of view, things don’t look too great for the fund from the last 1 year and 3 year time periods. Lump sum investments one year back would be down 21%, putting the fund right at the last rank among 35 peers (regular plans). In the 3-year period ended January 2, the fund is up just 5.8% compared to the category average of 10%. This performance puts the fund 31st among 33 peers, which is pretty bad for the second largest ELSS fund. It is only in the last 10-year time period that the fund’s performance looks respectable with 18% CAGR gain and overall rank of 6th out of 23.

The fund’s SIP performance in the last 1 year, 3 year and 5 year time periods is not good. It is often in the last 3-4 funds in each time period. The 10-year SIP performance looks better with nearly 13.7% CAGR and a rank of 9 out of 23.

We hope the recent blip in performance for the fund is a temporary glitch. Fund managers Ashwani Kumar is very experienced and is a proven performer but his stock picks in this fund may be a little ahead of time.

Reliance Tax Saver (ELSS) Fund
Lumpsum Performance
YTD 1-Month 3-Month 1-Year 3-Year 5-Year 10-Year
Fund -1.36 0.63 -0.3 -21.14 5.8 16.44 18.08
Category -0.76 0.03 0.22 -6.36 10.08 15.97 16.43
Rank within Category 34 6 21 35 31 12 6
Number of funds in category 35 35 35 35 33 29 23
SIP Performance
1-year 3-year 5-year 10-year
Fund -12.19 0.83 5.81 13.64
Rank within Category 33 32 26 9
Number of funds in category 35 32 28 23

3. Aditya Birla Sun Life Tax Relief 96

As you can figure from its name, this ELSS fund is very old. In fact, this is the 3rd oldest ELSS fund in Indian mutual fund industry. Coming from the ABSL MF stable, the fund, managed by Ajay Garg, has slowly earned its stripes and over the years has become a stable performer. Its just shy of Rs 7000 crore investor assets’ size (as on November 2018).

In terms of lump sum investment performance, the fund’s last one year hasn’t been that bad. It’s lost 4.5% NAV against a category average of 6.4% drop, placing the scheme 14th out of 35 peers. In the last 3-year, 5-year and 10-year time periods, the fund consistently comes in the top-10 list. In fact, the fund is ranked number 3 out of 23 peers in the last 10 years, thanks to its 18.55% CAGR return that bests the 16.4% category average.

In terms of SIP mode performance, Aditya Birla Sun Life Tax Relief 96 is a superb performer. In fact, it may be a better fund for SIP investors than Axis Long Term Equity Fund. We are saying this after ignoring the 1-year SIP performance. In each of different time periods, 3-year SIP, 5-year SIP, 10-year SIP, 15-year SIP and 20-year SIP, the ELSS fund is ranked extremely high. In fact, any SIP running for at least half a decade would have surely fetched you the best of returns in the category. It is ranked either 2nd or 3rd in these time periods.

Aditya Birla Sun Life Tax Relief 96
Lumpsum Performance
YTD 1-Month 3-Month 1-Year 3-Year 5-Year 10-Year
Fund -1.08 0.17 -0.33 -4.54 11.67 19.09 18.55
Category -0.76 0.03 0.22 -6.36 10.08 15.97 16.43
Rank within Category 28 19 22 14 7 3 3
Number of funds in category 35 35 35 35 33 29 23
SIP Performance
1-year 3-year 5-year 10-year 15-year 20-year
Fund -4.91 9.88 12.69 15.37 14.56 17.85
Rank within Category 18 6 2 2 3 2
Number of funds in category 35 32 28 23 13 4

Disclaimer – Please note that investors are requested to consult their financial, tax and other advisors before taking any investment decision.

Author
Rahul Sharma

Rahul Sharma is a contributing writer with RupeeIQ. He can be contacted on contact@rupeeiq.com