Top 5 ELSS Funds for tax savings

Bet on these for Better Returns

No. 5 Principal Tax Savings

NAV : Rs. 80.6

Launch Date : March 1996

5Year Returns : 55.96 %

3 Year Returns : 44.79%

1 Year Returns : 22.58%

Principal Tax savings fund has been able to get a rank in Top 5 ELSS funds of Investment Guru. Actually there was a neck to neck competition with Sundaram BNP Paribas Tax saver fund for this slot. However better consistency paid dividends and it finally managed to sneak in the Top 5 funds. The fund has high exposure to Energy, Financial Services, Services and Technology sectors. Reliance Industries, Phoenix International, Centurion Bank of Punjab, Grasim and Jindal Steel and Power fare among the top holdings.


No. 4 Prudential ICICI Tax Plan
NAV : Rs. 94.66

Launch Date : August,1999

5Year Returns : 51.08 %

3 Year Returns : 47.92%

1 Year Returns : 21.87%

This fund had a better three year return than the No.3 fund. However it lagged on the 5 year returns parameter with a big gap. This fund has high exposure to Health care, Chemicals, Diversified, FMCG and Auto Sector. Cedilla Healthcare, Sundaram Clayton, kesoram, Trent and Andhra bank are among the top holdings.

No. 3 HDFC LT Advantage Fund
NAV : Rs. 95.78

Launch Date : December,2000

5Year Returns : 55.96%

3 Year Returns : 44.79%

1 Year Returns : 22.58%

HDFC long term fund is a star performer from thye HDFC Stable. This fund has proved to be low risk and high Return fund. In terms of 5 Years performance it has actually done better than the No. 2 ranked fund. However, it has lagged in comparison to the No.2 fund in terms of 3 years return by a big margin. The fund has high exposure to FMCG, technology, metals, Chemicals and services sector. Top holdings include Concor, Maharashtra Seamless, Reliance Industries, SBI and Blue Star.


No. 2 HDFC Tax Saver
NAV : Rs. 149.33 (Growth option)

Launch Date : March,1996

5Year Returns : 52.86%

3 Year Returns : 54.19%

1 Year Returns : 28.13%

A star performer from HDFC, this fund has earned a distinct respect for itself in its category. The fund has an excellent track record and on the management front it should be ranked No.1 The fund has limited itself to a limited number of shares to improve its watch over its holdings. HDFC Tax saver funds has high exposure to Auto, Engineering, Technology, Construction and FMCG sector. Tata Motors, Crompton Greaves, Thermax, Infosys and Satyam are top holdings.


No. 1 SBI Magnum Taxgain
NAV : Rs. 58.19

Launch Date : March,1993

5Year Returns : 60.41%

3 Year Returns : 67.21%

1 Year Returns : 43.84%

The true leader in wealth creation, Magnum taxgain has been able to outperform all other ELSS funds on a consistent basis. The fund has bagged No. 1 rank in 1 Year, 3 Year and 5 Years returns. One of the main reasons for funds outperforming its peers is that it has able to take advantage of the ongoing boom by investing the hot sector at right time. Given the dynamic fund management, it is expected to continue its lead in the Tax saving mutual funds. However, the fund would get a tough competiton from HDFC Tax saver fund. Magnum Taxgain is heavily invested in Technolgy, Construction, Engineering, Diversified and Metal sectors. Jai Prakash, Shree Cement, Reliance Communication, Crompton Greaves and Infosys are the major holdings.

After going through the above analysis, Investment Guru is of the view that a prudent Investor should put his money in Magnum Taxgain and HDFC Tax saver Fund. For those who do not want liquidity at regular intervals, Growth option would be good. For those, who want regular tax free returns in their hands, choose the Dividend Payout Option.

13 comments:

KK said...

Hi Rajesh,
Thanks for the update!

KK

Anonymous said...

Hi Rajesh

Nice posts about Tax saving. Do you know whether I can buy these funds through icicidirect.com?

Regards,

Sajith

Rajesh Soni said...

Yes Sajith, You can buy these funds from ICICI Direct.You have to click on Mutual funds once you log in and then select the fund you want to purchase.

Anonymous said...

rajesh ji....SKumar is up 11% today what do you suggest. I have 500 shares @69 please suggest hold or sell or further buy ?
thnks
r k mittal

venkat said...

Dear Sir,
Thanks for the very useful information on tax saving schemes. I was about to put my money in PPF but after reading your blog I have decided to invest in tax saving mutual funds.Sir, I also hold 100 shares of Dabur. The stock has come down very heavily in last few days. My average buy price is Rs. 150. Current price is Rs. 103.please advice what to do.

S. Venkat

Rahul Kr Barnwal said...

Hi Rajesh,

You appear to be well read. Conratulation on a gr8 blog!
Since you are writing about mf, thought to take your perspective too - if one does not have a liquidity issue then how does dividend re-invest option stack up with growth option? Pl. enlighten.
Thanks & regards,
Rahul Kr Barnwal

Anonymous said...

Hi Rajesh

Thank you. I bought both SBI Magnum Taxgain and HDFC tax saver through icicidirect :-) But, do you know how will I get the proof of my investment to show to my employer? Can I also get it online?

Best regards,

Sajith

Anonymous said...

The Websites of all below Products for the benefit of non net-savvy persons (like my Dad)

No. 5 Principal Tax Savings

http://www.principalindia.com/presentation/View/FundDetail.aspx?FundID=58&IsFund=1


No. 4 Prudential ICICI Tax Plan

http://www.icicibank.com/Pfsuser/webnews/Pru_taxplan.htm

No. 3 HDFC LT Advantage Fund

http://www.hdfcfund.com/products/schemeShow.jsp?schemeId=5


No. 2 HDFC Tax Saver

http://www.hdfcfund.com/products/schemeShow.jsp?schemeId=87


No. 1 SBI Magnum Taxgain

http://www.sbimf.com/Product_Details.asp?ProductId=15

Anonymous said...

Hi Rajesh,

Thanks for the posts. Very useful. I have invested in Magnum tax gain and hdfc tax saver. Why dont Magnum announce dividend yet? Last time it announced dividend was on Jan 2006.

-shameer

Anonymous said...

Great post, wonderful analysis.

One thing to keep in mind when using the "Growth option" in an ELSS fund is this: When additional units are added (when a dividend payout is made in the Dividend option), these additional units are considered, for tax purposes, as a new purchase. The problem with this is that there is a further 3-year lock-in on these units from the date the units are added to the account.

Theoretically, for an ELSS fund that declares frequent dividends, this could lead to a situation where you could never redeem all units from the fund!

Ballack said...

There are many tax saving plans that you can take that help you to reduce the tax that you are currently paying. You can also ask your agent for tax saving tips. One of the ways to reduce tax is by giving donations to charity.

Anonymous said...

Sir ,
Including all saving ,how much I can save for a financial year which can save me from income tax.

indrajeet singh said...

There are many tax saving plans and SIP schemes in mutual funds. But you have suggested top Tax saving funds for online investment. These funds are very useful for those who worry about income tax. All tax payers can save tax up to Rs. 46,350/- u/s 80c and also can build wealth with ease if they Investing in these schemes.