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ELSS Funds (2023): Invest Smart, Save Big

ELSS funds

Tax savings are best achieved with ELSS Mutual Funds. It is therefore not at all difficult to decide to invest in ELSS Funds. It’s not exactly simple to choose the finest tax-saving mutual fund, with over 38 options available. We describe five ELSS funds in this blog that you can invest in for 2023.

What are ELSS Funds? 

Mutual funds known as ELSS Mutual Funds allow you to invest and claim a Section 80C tax deduction of up to Rs 1.5 lakh. As multi-cap funds, they make investments in businesses of all sizes and in a variety of industries. This has two benefits: one, you invest in all the areas that are advancing India, and second, diversity lowers the overall risk you face.

How Did We Decide On The Top ELSS Funds?

We search for the 38 ELSS mutual funds that have been around for at least three years. Next, we evaluated these mutual funds that save taxes across various time periods. A quality fund will have strong downside protection, or the ability to withstand losses in a declining market. Each ELSS fund has also been assessed according to how well it has performed in comparison to its own benchmark, and whether it has been able to surpass it.

Best ELSS Mutual Funds

Axis Long-Term Equity Fund: Since its introduction in 2009, Axis Long-Term Equity vehicle has grown to become the largest vehicle within the ELSS mutual fund category. Nine times out of ten since its launch, Axis Long Term Equity has outperformed its benchmark. Since its launch, the fund has generated average annual returns of 14.93%, while its seven-year returns have been 16.05%.

Invesco India Tax Plan: Launched in 2006, this tax-saving mutual fund adheres to a growth-at-acceptable pricing plan. In the meantime, the fund’s returns exceeded those of both the 2010 and 2014 rising market periods. The Invesco India Tax Plan is a viable choice for long-term investing due to its growth at a fair price strategy.

DSP Tax Saver: The DSP Tax Saver Fund was introduced in 2007 and has since changed its investment approach to reflect changes in the market. It combines growth and value-based strategies. This tax-saving mutual fund has been one of the most consistently performing funds in this category, and hence, it can be counted among the most reliable funds to invest in.

Kotak Tax Saver Fund: In 2005, the Kotak Tax Saver Fund was introduced. The fund has been allocating a larger portion of its assets to mid- to small-cap companies recently. At the moment, Kotak Tax Saver owns roughly 45% of mid- to small-cap companies.

Mirae Tax Saver Fund: There are two main reasons for our decision: First off, there has been a significant difference between this tax-saving mutual fund and its benchmarks as well as the category average since its launch. Compared to the category average, its three-year returns are almost 5% greater. The fund distributes its assets between mid-and small-cap stocks, making up the remaining 65–70% of the total.

Features of ELSS funds

Notable characteristics of ELSS mutual funds include the following:

  • ELSS funds offer many payout options. One is a growth plan where, upon the expiration of the lock-in period, you receive a lump sum payment. Another is the dividend plan, which pays out dividends on a regular basis for the three years that the plan is locked in.
  • The fund makes diversified, market capitalization-theme- and sector-diversified investments totaling at least 80% in equities and equity-related instruments.
  • There is a three-year lock-in term with no way to leave early.
  • The only tax-saving option that has the ability to yield returns that beat inflation is an ELSS fund.
  • Because ELSS invests in the turbulent equity market, they are regarded as high-risk investments.

Factors to Consider Before Investing in ELSS Mutual Funds

It is advisable to take into account the following factors when investing in ELSS mutual funds:

Financial goal and investment plan: Your financial objectives should be reflected in your investments. Choosing an investment strategy that takes into account your income, risk tolerance, and other aspects is therefore essential. It’s not a given that an investment plan that works well for one individual will also work well for you. Therefore, before purchasing ELSS units, decide what your investment goals are.

Risk appetite: The underlying securities of ELSS funds expose them to fluctuating market circumstances. As a result, there is a considerable risk involved with these funds. Therefore, before investing in ELSS mutual funds, take caution to evaluate your risk tolerance. Furthermore, the choice of mutual fund to invest in relies on your tolerance for risk.

Investment time horizon: The three-year lock-in term applies to ELSS funds. This implies that investors are unable to withdraw their profits and investments during that period. Thus, it is essential to think things through before investing in ELSS and giving up your assets for a period of three years.

Fund’s past performance: It is always advisable to review a fund’s performance over a trailing period of three, five, or more years if needed. It is easier for you to determine whether or not a particular scheme fits with your investment goals and plan when you are aware of how it has performed in prior years under various market situations.

Funds’ plans: A fund can choose between two different sorts of plans: regular and direct. Since brokers play no part in direct plans, investors are presented with options directly. Conversely, regular plans entail outside participation. Therefore, a commission is involved.


ELSS funds have a three-year lock-in period and save taxes. Despite their potential for large returns, they are regarded as extremely dangerous investments. By utilizing Tickertape’s Mutual Fund Screener, you can select the best mutual fund depending on your investment preferences and risk tolerance, saving you time and effort in your research!

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