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Best ELSS or tax saving mutual funds to invest in 2019

Unleash the power of SIP – Invest in Mutual funds

Best ELSS or tax saving mutual funds to invest in 2019

Many mutual fund investors are hunting for the best Equity Linked Saving Scheme or ELSSs to save taxes under Section 80C of the Income Tax Act.

It is the beginning of the financial year, and this is the best time to start your tax-saving investments. And you know an Equity Linked Saving Scheme (ELSS) or tax saving/planning mutual fund scheme is the best way to save taxes. Investments inELSSfunds qualify for tax deductions of up to Rs 1.5 lakh under Section 80C of the Income Tax Act. Go ahead and start your Systematic Investment Plan in an ELSS right away.

To make your task of choosing the righttax savingmutual funds easy, we have put together a bunch of schemes you may consider investing to save taxes this year.

Here are a few pointers before you proceed: one, do not invest in ELSS just because they have the potential to offer superior returns over a long period. You should invest in ELSS only if you have the risk appetite to invest in an equity scheme. Equity, as you would know, is risky; it can also be volatile in the short term. Of course, it has the potential to offer superior returns over a long period. However, that alone need not be your criteria to invest in ELSSs.

If you dont have the risk appetite, do not invest in them. Just remind yourself that they invest mostly in stocks. Sacrifice those extra returns and be happy with the traditional favourites like Public Provident Fund (PPF), 5-year bank deposit, and so on.

Two, you must have heard the sales pitch that ELSS funds have the shortest mandatory lock-in period of three years among the tax-saving investment options available under Section 80C. Yes, tax savingmutual fundshave the mandatory lock-in period of only three years. However, that doesnt mean you should invest in them with a horizon of just three years in mind.

Since they are essentially equity mutual fund schemes, you should invest in them with an investment horizon of at least five to seven years.

Finally, include ELSS in your overall financial plan. They are ideal to meet your long-term financial goals. You need not rush to redeem them as soon as they complete the mandatory lock-in period of three years. You may hold on to these schemes as long as they are performing well.

If you still qualify to invest in ELSS funds but dont know which schemes to choose, here is help. Here are our recommended Equity Linked Saving Schemes or tax saving mutual funds to invest in 2019.

We will update you on the performance of these schemes on a regular basis. If you want to know about the methodology employed to choose these schemes, please go through it below:

Methodology:

< Mutual Funds has employed the following parameters for shortlisting the Equity mutual fund schemes.

1.Mean rolling returns: Rolled daily for the last three years.

2.Consistencyin the last three years: Hurst Exponent, H is used for computing the consistency of a fund. The H exponent is a measure of randomness of NAV series of a fund. Funds with high H tend to exhibit low volatility compared to funds with low H.

i) When H = 0.5, the series of return is said to be a geometric Brownian time series. These type of time series is difficult to forecast.

ii) When H is less than 0.5, the series is said to be mean reverting.

iii) When H is greater than 0.5, the series is said to be persistent. The larger the value of H, the stronger is the trend of the series

3.Downside risk: We have considered only the negative returns given by the mutual fund scheme for this measure.

Z = Y/number of days taken for computing the ratio

4.Outperformance: It is measured by Jensens Alpha for the last three years. Jensens Alpha shows the risk-adjusted return generated by a mutual fund scheme relative to the expected market return predicted by the Capital Asset Pricing Model (CAPM). Higher Alpha indicates that the portfolio performance has outstripped the returns predicted by the market.

[Risk Free Rate + Beta of the MF Scheme * (Average return of the index – Risk Free Rate

5.Asset size: For Equity funds, the threshold asset size is Rs 50 crore

(Disclaimer: past performance is no guarantee for future performance.)

Planning to invest in mutual funds to build a retirement corpus? Here is what you should know.

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(%)Mirae Asset Tax Saver Direct-G1.076.5014.708.2121.90Mirae Asset Tax Saver Reg-G0.906.0213.676.7420.26Invest NowMotilal Oswal Long Term Equity Fund Direct-Growth

ELSS-0.824.3510.94-6.7816.91Invest NowFeatured

ICICI Prudential Long Term Equity Fund (Tax Saving)- Growth

ELSS1.577.0011.295.6312.64Invest NowFeatured

ELSS0.817.8017.343.5615.04Start SIPFeatured

ELSS-0.044.5210.822.6615.05Invest NowFeatured

ELSS2.076.2414.152.7914.94Invest NowUTI Equity Fund Direct-Growth

Multi Cap1.135.7613.454.9013.58UTI Mastershare Direct-Growth

Large Cap0.645.8812.724.7912.87UTI Nifty Index Fund Direct-Growth

Large Cap1.047.1114.4810.5614.74UTI Money Market Fund Direct-Growth

Money Market0.752.084.298.367.51SBI Bluechip Direct Plan-Growth

Large Cap0.936.7313.530.6111.84Motilal Oswal Focused 25 Fund Direct-Growth

Large Cap1.246.3412.881.2913.80Invest NowICICI Prudential Nifty Next 50 Index Direct-Growth

Large Cap0.372.368.86-7.7813.74Invesco India Growth Opportunities Fund-Growth

Large & MidCap0.805.1313.000.9215.07Invest NowDSP Midcap Direct Plan-Growth

Mid Cap0.985.7514.69-4.9815.27Start SIPCanara Robeco Emerging Equities Fund Regular-Growth

Large & MidCap1.186.4713.99-1.7516.43Mirae Asset India Equity Fund Regular- Growth

Multi Cap0.586.3513.288.4816.54Invest NowDSP Focus Direct Plan-Growth

Multi Cap0.507.2513.591.2111.36Start SIPMotilal Oswal Multicap 35 Fund Direct-Growth

Multi Cap-0.224.1613.68-5.0715.30Invest NowTata Retirement Savings Fund Progressive Plan Direct-Growth

Multi Cap0.306.1914.02-0.4816.98L&T Midcap Fund Direct-Growth

Mid Cap0.652.969.29-9.1116.75Motilal Oswal Midcap 30 Fund Direct-Growth

Mid Cap2.337.2214.65-2.609.30Invest NowHDFC Mid-Cap Opportunities Fund-Growth

Mid Cap1.235.8812.27-7.5513.56Invest NowL&T Emerging Businesses Fund-Growth

Small Cap0.071.884.85-14.4218.50Invest NowDSP Small Cap Direct Plan-Growth

Small Cap0.825.9210.21-16.879.13Start SIPDSP Equity Opportunities Direct Plan-Growth

Large & MidCap0.186.5614.230.2914.68Start SIPDSP Credit Risk Direct Plan-Growth

Credit Risk0.612.210.06-0.955.10Start SIPSBI Small Cap Fund-Growth

Small Cap0.645.019.09-12.7916.08Invest NowICICI Prudential Value Discovery Fund-Growth

Value Oriented0.885.365.150.488.68Invesco India Contra Fund Direct-Growth

Value Oriented-0.524.5710.36-0.1917.29Motilal Oswal Long Term Equity Fund Direct-Growth

– Returns less then 1 year are absolute and above 1 year are annualised.

– Returns of 1 year are absolute and above 1 year are annualised..

Which ELSS or tax saving mutual funds are good for beginners?

Can tax saving mutual funds help you to achieve your long-term financial goals?

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