Which are the best tax saving mutual funds in India for 2012 where you should invest your money ? Note that tax saving mutual funds are also called ELSS (Equity Linked Saving Schemes). So we are gunning for the best performing ELSS mutual funds to invest your money in India in 2012.
A small caveat. The fate of tax savers is not yet known post the Direct Tax Code (DTC) implementation, so it might be prudent to wait for this budget if you are going to start investing for the first time. For those who are investing in ELSS mutual funds for sometime now, do continue if your requirement is so.
ELSS Mutual Funds – Listing for 2012
Investing your money in such ELSS mutual funds offers you double advantage, – you can claim Section 80C deductions and make your money grow via long term investing. Please note that such mutual funds have a lock in period of 3 years.
Without much ado – here goes my list for 2012.
1. Canara Robeco Equity Tax Saver
Launched around 18 years back, Canara Robeco Equity Tax Saver is bench marked against BSE 100.
With a return since launch of around 14.5% and a below average risk grade, this has given decent returns. The fund manager ensures a diversified portfolio with no market cap or sector bias. The fund invests in growth-oriented companies with strong fundamentals.
2. Taurus Tax Shield
As old as Canara Robeco Equity Tax Saver, Taurus Tax Shield is bench marked against BSE 200 and has delivered a consistent returns of approximately 11% since launch. It must be fun for the fund manager to manage a small corpus of Rs 65 crores. The fund manager invests across the market capitalization and sectors. The selection of stocks is made on the basis of long-term business prospects and value creation.
3. Fidelity Tax Advantage
Around 5 years old, as compared to the above two, Fidelity Tax Advantage is a new kid on the block. It is a huge fund in terms of corpus, managing around 1120 crores. Benchmarked against BSE 200, it has delivered around 13% since launch. The fund manager does bottom up picking of stocks based on their core strength of the companies and is not restricted by any market capitalization or sector.
Few more ELSS Mutual Funds –
4. Franklin India Taxshield
This 12 year old mutual fund is benchmarked against S&P CNX 500 and manages around 790 crores of fund corpus. The returns since launch are a whopping 26% and it has shown its ability to limit the downside during market falls better than its competitors. That is what has made it stand out.
As above, this fund also follows a bottom up picking strategy and does not limit itself to any market capitalization.
5. Sahara Tax Gain
Around 14 years old, this is a small fund with a corpus of Rs 10 crores. It is benchmarked against BSE 200 and the returns since launch have been around 26%.
It invests around 20% each in mid cap and small cap stocks while the rest goes into large cap. The top 3 sectors account for 45% of its holdings.
6. Religare Tax Gain
With a net assets of around 100 crores, this 6 year old mutual fund has delivered around 10.5% since launch. Benchmarked against BSE 100, it follows the bottom up picking strategy and invests across all market capitalizations.
It picks around 20 to 50 stocks and has a multi cap approach strategy.
7. HDFC LT Advantage and HDFC Taxsaver
HDFC LT Advantage compares itself with the Sensex and manages a corpus of Rs 900 crores while HDFC Taxsaver manages Rs 2880 crores with a benchmark against S&P CNX 500. The scheme has returned around 30% since launch while HDFC LT Advantage has given 25%.
Coming from the stable of HDFC Fund House, these are very good funds that can find a place in your portfolio in 2012.
8. ICICI Prudential Tax Plan
With a return of around 23% since launch, this 12 year old fund manages 1200 crores and is benchmarked against S&P CNX 500. It takes a relatively larger exposure to mid cap and small cap stocks and hence has shown stellar performance in some years while getting the boot in others when the markets fell. There are some 60 stocks in the portfolio with no stock going over 5% in allocation and not sector going over 20%.
Cool, I like Canara Robeco Equity Tax Saver, Fidelity Tax Advantage and HDFC TAX Saver.
@Chirag, You just like or have you invested in them ? Why like ?
Radhey,
Thanks for the post, HDFC Tax Saver & Sundaram Tax Saver are in my portfolio since last five years, no fresh investments. Now EPF, PPF & LIC complete my 80C requirements.
Rakesh
@Rakesh, How many mutual funds do you have sir ?
@Radhey,
I have 2 ELSS funds and 5 others in which i am regularly siping.
Also had lump-sum investments in few others which i did not redeem.
Rakesh
@Rakesh, ok great, keep going !
Hi,
I am planning to start an SIP for mutual funds. I am a beginner and please suggest which is the best SIP that I can start as of now.
regards
Senthil
@Senthil,
Read the below articles :
Best Large Cap Mutual Funds to invest in 2012 in India – https://www.thewealthwisher.com/2012/01/08/3-best-large-cap-mutual-funds-to-invest-in-2012-in-india/
Best Large Cap and Mid Cap Mutual Funds to invest in 2012 in India – https://www.thewealthwisher.com/2012/01/11/4-best-large-and-midcap-mutual-funds-to-invest-in-2012-in-india/
Best Mid Cap and Small Cap Mutual Funds to invest in 2012 in India – https://www.thewealthwisher.com/2012/01/13/best-mid-cap-small-cap-multi-cap-mutual-funds-to-invest-in-2012-in-india/
Hello,
I wish to invest around Rs.40,000 for tax saving purpose in Tax Saving MF.Please suggest two best MF for the same.
Thanks,
Tushar Thaker.
@Tushar Thaker, Pick any from the above – is a no brainer !
@Tushar,
40K at this time of the year and that too at one go. Quite risky i must say given the run-up market has given in the last one month. If market tanks 10-15% from here, it will hurt your portfolio bad. Next year you should start SIP’s at the start of the year.
Rakesh
@Tushar Thaker, If you are investing 40k, you should try to diversify your portfolio and it cannot happen just with 2 MFs.
You need to have large cap, multi cap, mid & small cap, balanced and may be a gold ETF too. Distriute the amount in 4-5 MFs depending on your goals.
Also, it is not advisable to have more than one MF from a single fund house.
@Tushar Thaker, I agree with Radhey. I do not think that it is the right time to invest Lumpsum amount in ELSS. If you have a long term view on this investment then it shouldn’t matter much. But if you are looking to withdraw the money after the lock in period of 3 years then you might be in for a surprise (a negative return). Some of my friends who invested when the market was at it’s peak in 2008 and just before the market bottoming out in 2008 have still not recovered from their losses and as a consequence of that are worried about investing in ELSS or for that matter any Equity related Mutual Funds in the future. I would suggest that it is better to Opt for SIP for ELSS also.I am not sure about the implementation of DTC for the next financial year. If DTC is implemented then the 80C tax benefit of ELSS would go away. I would wait till we get a clarity on DTC implementation before planning for the next Year’s investment.
In case of ELSS funds since there is a locking period of 3 years, so its better to go in for dividend payout option. This way you can get part of your money back. Its like forced profit booking. HDFC Long Term Advantage Fund has declared Rs. 4.00 as dividend recently. With only one more month to go you will see a lot of fund companies declaring dividends to attract investors.
Rakesh
@Rakesh, I don’t quite agree with that – why do you need to go with the dividend option at this stage in your life ? Any money that is required now should come from your income.
You need your corpus to grow multiple times and dividend only reduces that – go for growth at so young an age.
@Radhey,
Agree with you, what i do is inorder to protect my investments, the dividend earned would be invested in debt funds namely MIP’s
Rakesh
I invest in HDFC tax Saver, Religare Tax plan and Canara Robeco tax saver for my tax savings. I invest through SIP mode since I believe lumpsum investment in ELSS/Equity MF is not a good idea. I have a very aggrssive risk profile and thus I invest the remaining amount from the 1Lac limit )after deducting my EPF contribution & Term insurace premium) in ELLS funds. I have been doing this for the last 3 years. Even though the returns have been negative so far( but not by a big margin since I was investing via SIP mode) since I have a long term view on these investments I am not concerned about how these funds are doing right now. I beleive in India’s growth story and is very positive on that.
@Shanil, Good good – you are going to be very very rich down the line. I think your finance fundas are crystal clear. Keep helping the readers here please. Thanks,
@Radhey Sharma, Thanks Radhey. If you think that I am doing good with my investments then I believe the credit should go to people like you. I have learned so much from your blogs. You are doing a fantastic job in educating the investors. Keep going and I will be here to support your effort.
@Shanil, Very much appreciated sir.
@Shanil,
Agree with Radhey, you seem to be a very knowledgeable investor. I have read your other posts too and they are very detailed.
Rakesh
Canara Robeco has been consistent performer over the last 5 years. Would like to invest in this fund this financial year.
Rakesh
I want to save tax in 80C section, I have not done any tax saving in the past.
Please guide me. I’m planning to diversify my investment as follows:
1. 60000.00 in ELSS
2. 13000.00 term insurance plans
3. 12000.00 ppf
4. 15000.00 5 yr tax saving FD
——————-
100000.00 Total
Please guide if i need to reconsider my breakup of investments
Seems ok for now, can’t really comment on without knowing your holistic picture. Also, if you are salaried, the EPF part will also be considered towards Sec 80C. So make a note of that as well.
I have just started working. so want to reap maximum benefit along with tax saving. my salary is 40k and I want to save 10k per month.. kindly advise. if the above breakup is ok or it should be modified.
Thanks in advance.
Regards,
Gaurav
Have you formed an emergency fund yet ? I recommend that before you go ahead and invest keep 3-5 months of expenses in a liquid avenue (savings + sweep in account).
After having formed this, take health insurance for you + dependants and term insurance for yourself.
And then invest for long term goals.
The above split is ok as long as some liquid money is available.
Thanks a lot for your valuable input.
I have one more question as I have been bombarded with money back plans such as:
1. Reliance Guaranteed Money Back Plan
2. ICICI GSIP
3. ICICI Pru Pinnacle Super – Highest NAV fund B
What do you think about these plans?? does these provides favorable return along with tax saving.
Forget about these and stay far far far away from them.
@Gaurav MFs are a better choice any day over these plans.
I don’t think you need to invest 13k in term insurance plans. You may want to assess how much coverage you need rather than how much you want and then decide on the premium amount.
Also, I suggest to invest more in PPF rather than tax saving FD. Yes, the locking period is more but that’s where power of compounding plays a favorable role for you.
Select ELSS funds carefully and don’t panic if they go down during initial years, MF investments are for long term.
All this of course after you have put emergency funds and mandatory insurance in place viz. life, accidental and health.
Regarding term insurance plans should I go for aegon religare and bharti axa plans or the old LIC term plans or split it between the two.
And regarding PPF, ICICI is also offering ONLINE PPF. or should I go with SBI or Post office. Im confused 🙁
@Gaurav,
My experience with Aegon was not good hence i bought online term plan from Aviva, it was the cheapest then. As for PPF you can open it with ICICI. Even you can open an account with SBI and transfer funds online to your PPF account with them.
Yeah, AVIVA is also good.
I suggest to avoid post office.
From personal experience I stay away from ICICI, so you are left only with SBI. The choice is yours but online access gives you a lot convenience.
@Gaurav For term plans I suggest to split the total SA between two companies. You may look at Aviva, Kotak, HDFC, LIC.
LIC does not have online option hence it is the most expensive one.
PPF – Go with the one with which you are comfortable.
Term plan – I would skip LIC and go with Aegon Religaire, HDFC CLick2Protect.
Hi,
Im running short of 24k in 80c, Should i go and apply for sip of 2000Rs p.m in Any of the ELSS fund mentioned above.IS ELSS still the part of Tax saving.
Thanks
Vineet
Yes it still is part of tax saving instruments.
Whether you can go and apply for it depends on a host of other factors which cannot be answered so simply.
But yeah, if you do, go the SIP way.
Hope you have counted EPF in, generally people miss that.
@Vineet,
You can select two funds from above and start sip of rs. 1000 pm on each of them.
Canara Robeco & HDFC tax saver are good, but do your own research and invest.
Plz guide me for the investment
@Prasad,
What is your question?
Hi,
I am a 22year old graduate ,who recently joined a company. i get a monthly salary of 50k. 42 k per year is deducted as employees contribution to PF. Also i have medical insurance and life insurance of 5 lakh from the company. So what will be the best way to invest the remaining around 60k so as to save tax and also to start buliding my portfolio. Is there any need to go for additional life insurance policies or should i be looking for mutual funds and ELSS ? please help.. Thanks..
@Akhil,
Congrats on your first step towards financial planning. Please browse to various articles here and you will get a wealth of information. If you have dependents then it makes sense to buy online Term insurance. You could also look at ELSS, PPF as other source of investments.
As you are very young, you could invest more in equity. Remember equity is for a long term.
I am planning to invest in ELSS Tax saver. I am quite confused and need your valueable advise. Which Tax Saver MF should I go for as it is the very first time that I am investing:
Can Robexo, Franklin Temp, HDFC, ICICI Pru, Reliance MF of TATA MF?
Also how does it is different if we invest in ELSS in Lump sum and the same in SIP?
@Anupam,
You can go for Can Robexo, its a good fund. As for investing lump sum, when market is down on a particular day you can invest lump sum of say 5k. But you know you can’t time the market. Instead start an sip of 1k or 2k each month and when there is a sharp correction invest in lumpsum. Do remember ELSS has a locking period of 3 years.
I have to invest 2 lakhs in elss mutual funds to save tax before march.,In my husbands &my name.Am confused which funds to select.Will have to do lumpsum which is not supposed to be good.what shall I do .Please help!
What about EPF, does your employer deducts it? Have you invested in PPF? Any LIC policies. All these can be included as investments in Rs. 1 lakh.
As Rakesh says, you will need to first find out how much of the investment you have already made for Sec 80C benefits. Then for the rest, you can invest in ELSS. What is your husbands and your’s salary ?
Hi,
I am earning 41,000 per month and have not invested anywhere till now. My age is 25 years and I want to start investing now. I am very confused. Please guide me. I want to invest in ELSS via SIP. Will my money grow for 3 years lock down period if I invest around 10k every month. Also, should I gor for LIC Jeevan anand and such traditional or ULIP plans ?
@Santosh,
You are at the right place. Read various articles on financial planning and you will gain knowledge. SIP in ELSS is good, also take a term plan for yourself and invest in PPF.
Stay away from LIC and ULIP plans. Feel free to ask more questions.
Hi,
Please suggest a tax saver fund and gold ETF fund. I want to Rs. 1000 in both funds for long terms through SIP and expecting Rs. 5 lakhs after 10 years.
Currently i am holding UTI opportunities and HDFC Balanced fund of Rs. 1000 per month from last two months. Also, planning to save 1o lakhs for child education (getting married in this year) and 25 lakhs for Retirement. Please suggest me additional funds and amount to be invested through SIP.
Thanks,
Rajanandan
Choose any tax saver from the above.
Any gold ETF will do – why don;t you research a bit and give us 3 options which you like and we can together decide which is the best.