Top 10 ELSS funds that beat benchmarks in 2023

Equity Linked Saving Schemes (ELSS) offer a dual benefit: tax savings under Section 80C and the potential for long-term wealth creation through equity market investments. However, navigating the ELSS landscape can be challenging, especially when choosing funds that consistently outperform their benchmarks.

While past performance isn’t a guarantee of future results, understanding the top performers in 2023 can be a good starting point for your research.

Disclaimer: This blog is for informational purposes only and should not be considered financial advice. Please consult a qualified financial advisor before making any investment decisions.

Top Performers of 2023:

Here are some of the ELSS funds that outperformed their benchmarks in 2023, based on their returns:

1. SBI Long Term Equity Fund (33.99%): This multi-cap fund managed by SBI Funds, delivered the highest returns in 2023. It focuses on investing in companies across market capitalizations, with a tilt towards large and mid-cap stocks.
2. Motilal Oswal ELSS Tax Saver Fund (32.76%): This multi-cap fund, managed by Motilal Oswal Mutual Fund, actively manages its portfolio based on a growth-oriented investment philosophy.
3. ITI ELSS Tax Saver Fund (31.54%): This multi-cap fund, managed by ITI Mutual Fund, focuses on identifying companies with long-term growth potential across market capitalizations.
4. Bank of India Tax Advantage Fund (30.49%): This multi-cap fund, managed by BOI Asset Management Company, invests in companies with strong fundamentals and growth prospects across sectors.
5. Axis Long Term Equity Fund (29.70%): This multi-cap fund, managed by Axis Mutual Fund, focuses on identifying companies with potential for sustainable growth at reasonable valuations.

Beyond the Numbers

While these funds delivered impressive results in 2023, it’s crucial to go beyond just the headline numbers when choosing an ELSS fund. Here are some additional factors to consider:

• Investment Philosophy: Each fund has a unique investment approach, such as focusing on growth, value, or a particular market capitalization. Align your investment philosophy with the fund’s strategy.
• Fund Manager Experience: The track record and experience of the fund manager play a significant role. Look for managers with a proven ability to navigate market cycles and consistently generate returns for investors.
• Expense Ratio: This fee, charged by the fund to cover its operational costs, directly impacts your returns. Compare expense ratios of different funds before investing.
• Risk Profile: ELSS funds inherently carry market risk due to their equity exposure. Understand your risk tolerance and choose a fund that aligns with your risk appetite.
• Investment Horizon: ELSS funds are best suited for long-term investors, ideally with a minimum investment horizon of 5-7 years, to ride out market volatility and capture potential long-term growth.

Remember

• Diversification: Don’t put all your eggs in one basket. Consider diversifying your ELSS portfolio across different fund houses and investment styles.
• Regular Reviews: Regularly review your ELSS investments based on your overall financial goals, risk tolerance, and market conditions.
• Consult a Financial Advisor: Seek professional guidance from a qualified financial advisor who can help you make informed investment decisions based on your individual circumstances.

Way Forward

Choosing the right ELSS fund requires careful consideration of various factors beyond just past performance. By understanding your own financial goals, risk tolerance, and conducting thorough research, you can make informed investment decisions and potentially benefit from the long-term wealth creation potential offered by ELSS funds.