Equity Linked Savings Schemes (ELSS) have emerged as a popular choice among investors seeking a combination of tax savings and potential wealth creation. These mutual funds offer a lock-in period of three years and invest predominantly in equities, making them eligible for tax deductions under Section 80C of the Income Tax Act.
Although past performance does not guarantee future results, some ELSS funds have grown remarkably over the past three years. Here, we explore eight funds that have achieved a Compound Annual Growth Rate (CAGR) exceeding 20% in this timeframe.
Understanding ELSS and Its Benefits
Before we explore these high-performing funds, let’s briefly understand the concept of ELSS and its advantages.
- Tax Savings: ELSS investments are eligible for tax deductions under Section 80C, allowing you to save up to Rs. 1.5 lakh in income tax.
- Equity Exposure: These funds primarily invest in equities, offering the potential for higher returns compared to other tax-saving options.
- Diversification: ELSS funds typically invest across various sectors and market capitalizations, reducing investment risk.
- Long-term Wealth Creation: With a lock-in period of three years, ELSS encourages disciplined investing and promotes a long-term investment horizon.
Top Performing ELSS Funds
Of the approximately 36 ELSS funds available, a select group of eight delivered exceptional returns, exceeding a 20% CAGR over the past three years.
SBI Long-Term Equity Fund
SBI Long Term Equity Fund is an Equity Linked Savings Scheme (ELSS) offered by SBI Mutual Fund. It provides tax benefits under Section 80C, has a 3-year lock-in period, and primarily invests in equities. Known for its consistent performance and large asset base, it’s popular among investors seeking tax savings and long-term wealth growth.
The oldest ELSS funds, SBI Long Term Equity Fund delivered an impressive CAGR of approximately 26.92% over the past three years. This translates to a remarkable 2.04 times growth on an initial investment of Rs. 1.5 lakh, turning it into Rs. 3.06 lakh.
| Fund Name | Investment | Total Value | 3 Year CAGR | Wealth Increased By |
| SBI Long-Term Equity Fund | 1.5 Lakh | 3.06 Lakhs | 26.92 | 2.04 Times |
HDFC BANK FD HDFC ELSS Tax saver
The HDFC ELSS Tax Saver Fund is an Equity-Linked Savings Scheme providing tax benefits under Section 80C, with a three-year lock-in period. It invests in a diversified equity portfolio to achieve long-term capital appreciation.
HDFC ELSS Tax Saver delivered a strong performance, generating a CAGR of approximately 24.76% over the past three years. This impressive return resulted in an investment of Rs. 1.5 lakh, which grew to Rs. 2.91 lakh, a 1.94-times increase.
| Fund Name | Investment | Total Value | 3 Year CAGR | Wealth Increased By |
| HDFC Bank FD ELSS Tax Saver | 1.5 Lakh | 2.91 Lakhs | 24.76% | 1.94 Times |
Quant ELSS Tax Saver Fund
Quant ELSS Tax Saver Fund is known for its consistent performance and tax-saving benefits. It’s an equity-linked savings scheme with a 3-year lock-in period. With a focus on growth and a disciplined investment approach, the fund aims to generate long-term capital appreciation for investors.
Quant ELSS Tax Saver Fund delivered a strong CAGR of 23.55% over the past three years. An initial investment of Rs. 1.5 lakh would have grown to Rs. 2.82 lakh, representing a substantial 1.89 times increase.
| Fund Name | Investment | Total Value | 3 Year CAGR | Wealth Increased By |
| Quant ELSS Tax Saver Fund | 1.5 Lakhs | 2.82 Lakhs | 23.55% | 1.89% |
Motilal Oswal ELSS Tax Saver Fund
Motilal Oswal ELSS Tax Saver Fund is an equity-linked savings scheme offering tax benefits under Section 80C. Known for its growth-oriented approach, the fund aims to generate long-term capital appreciation. It has a 3-year lock-in period.
Motilal Oswal ELSS Tax Saver Fund delivered a strong three-year performance, with a CAGR of 22.62%. An initial investment of Rs. 1.5 lakh has grown to Rs. 2.76 lakh, reflecting a solid 1.84 times return.
| Fund Name | Investment | Total Value | 3 Year CAGR | Wealth Increased By |
| Motilal Oswal ELSS Tax Saver Fund | 1.5 Lakhs | 2.76 Lakhs | 22.62% | 1.84% |
JM ELSS Tax Saver Fund
JM ELSS Tax Saver Fund is an equity-linked savings scheme offering tax benefits under Section 80C. It aims to generate long-term capital appreciation through investments in equities. With a focus on growth, it has a 3-year lock-in period.
JM ELSS Tax Saver Fund delivered a strong CAGR of 22.51% over the past three years. An initial investment of Rs. 1.5 lakh would have grown to Rs. 2.75 lakh, representing a 1.84 times increase in wealth.
| Fund Name | Investment | Total Value | 3 Year CAGR | Wealth Increased By |
| JM ELSS Tax Saver Fund | 1.5 Lakhs | 2.75 Lakhs | 22.51% | 1.84 Times |
Franklin India ELSS Tax Saver Fund
Franklin India ELSS Tax Saver Fund is an equity-linked savings scheme offering tax benefits under Section 80C. It aims to generate long-term capital appreciation by investing in a diversified equity portfolio. A 3-year lock-in period suits investors seeking tax savings and potential wealth growth.
Franklin India ELSS Tax Saver Fund generated a solid CAGR of 21.12% over the past three years. An initial investment of Rs. 1.5 lakh would have grown to Rs. 2.66 lakh, representing a 1.78 times increase in value.
| Fund Name | Investment | Total Value | 3 Year CAGR | Wealth Increased By |
| Franklin India ELSS Tax Saver Fund | 1.5 Lakhs | 2.66 Lakhs | 21.12% | 1.78% |
Nippon India ELSS Tax Saver Fund
Nippon India ELSS Tax Saver Fund is an equity-linked savings scheme offering tax benefits under Section 80C. It aims to generate long-term capital appreciation by investing primarily in equities. With a 3-year lock-in period, it’s a suitable option for investors seeking tax savings and potential wealth growth.
Nippon India ELSS Tax Saver Fund delivered a commendable CAGR of 20.54% over the past three years. This translated to a 1.75 times growth on an initial investment of Rs. 1.5 lakh, reaching Rs. 2.62 lakh.
| Fund Name | Investment | Total Value | 3 Year CAGR | Wealth Increased By |
| Nippon India ELSS Tax Saver Fund | 1.5 Lakhs | 2.62 Lakhs | 20.54% | 1.75 Times |
Bank of India ELSS Tax Saver
Bank of India ELSS Tax Saver is an equity-linked savings scheme offering tax benefits under Section 80C. It aims to generate long-term capital appreciation through investments in equities. With a lock-in period of three years, it’s suitable for investors seeking tax savings and potential wealth growth.
Bank of India ELSS Tax Saver delivered a 20.10% CAGR over the past three years. This translated to a 1.73 times growth on an initial investment of Rs. 1.5 lakh, reaching Rs. 2.59 lakh.
| Fund Name | Investment | Total Value | 3 Year CAGR | Wealth Increased By |
| Bank of India ELSS Tax Saver Fund | 1.5 Lakhs | 2.59 Lakhs | 20.10% | 1.73% |
*Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as recommendation or investment advice by Research & Ranking. We will not be liable for any losses that may occur. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL, and certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.
FAQs
What is an ELSS fund?
An ELSS (Equity Linked Savings Scheme) is a mutual fund that invests primarily in equities and offers tax benefits under Section 80C of the Income Tax Act. It comes with a mandatory lock-in period of three years.
Why should I invest in an ELSS fund?
ELSS funds offer a dual benefit: tax savings and the potential for higher returns due to equity exposure. They are suitable for investors with a long-term investment horizon seeking to build wealth and save taxes simultaneously.
How do I choose the right ELSS fund?
While past performance does not indicate future results, it’s essential to consider factors like the fund’s investment philosophy, performance track record, fund manager’s experience, expense ratio, and risk appetite before making a choice. Diversification across different ELSS funds is also advisable.
Is investing in ELSS mandatory?
No, investing in ELSS is not mandatory. It’s one of the many options to claim deductions under Section 80C. Other options include PPF, NPS, life insurance premiums, and tuition fees. You can choose the investment option that best suits your financial goals and risk profile.
I’m Archana R. Chettiar, an experienced content creator with
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