Get handsome returns in 5 years with these tax-saving funds
Disclaimer: This story is for informational purposes only and should not be taken as investment advice.
With markets in the midst of a bull run, equity-linked savings schemes (ELSS) of mutual funds are increasingly finding takers due to their lowest lock-in period of three years, as compared to other options, such as PPF, NSC and bank fixed deposits.
Here are some of the ELSS tax saving funds that have given stellar returns in the past 5 years, as reported by Economic Times.
The first one is Reliance Tax Saver, which gave a return of around 12.31/22.08 in 3/5 years. The top three holdings are TVS Motor, SBI, ICICI Bank.
The fund manager helps to identify companies with high quality management and promoters with good understanding of underlying business. ET reported that, 60 per cent of the portfolio is allocated to core large cap companies, while the balance is invested in mid and small cap stocks to generate additional alpha for the portfolio.
Second in the list is Axis Long-Term Equity with a return of 12.34/22.05 in 3/5-year. The top three holdings are HDFC Bank, Kotak Bank and Maruti. The AUM sums to Rs 4,266.
As per the report, the fund manager looks for scalable businesses with a high return on capital and structural growth. As compared to peers, the fund manager has a higher allocation to large caps at 70 per cent of the portfolio, and the remaining in midcaps.
BSLI Tax Relief 96 is the third fund which gave a return of 15.98/21.66 in 3/5-year. It's top three holdings are Sundaram Clayton, Honeywell Auto and Gillette. The Assets Under Management is Rs 4,266.
According to ET, the fund has a 40 per cent exposure to large caps with the balance in mid and small-cap stocks following a multicap approach.
IDFC Tax Advantage follows the list with 16.69/20.83 return in 3/5-year. The top three holdings are HDFC Bank, Future Retail and ICICI Bank. The company's AUM is Rs 740 crore.
As per the report, the fund manager adopts ‘growth at a relative value’ approach while selecting stocks. The portfolio comprises 55-70 stocks and has a long tail, with the top 10 holdings accounting for 28 per cent of the portfolio.
About 45-60 per cent of the portfolio is in large caps to give stability to the portfolio, and the balance is parked in mid and small caps to generate alpha for the portfolio.
The fifth one is Tata Tax Savings with 16.69/20.87 interest in 3/5 years. ICICI Bank, HDFC Bank and Future Retail are the top three holdings with Rupesh Patel as fund manager. The company has a total AUM of Rs 912 crore.
Tata Tax Savings eyes quality companies with compounding characteristics.
ET says that, usually the fund has a 50:50 mix of large cap and mid cap stocks and it is a blend of value and growth. The fund manager runs a diversified portfolio of 60-65 companies with the top-10 ideas accounting for about 30 per cent of the corpus.