31st March is less than 2 weeks away. You can still invest some money to save income taxes. But you have your financial year-end deadlines to meet at work as well. There’s so much to do, the last thing you can give priority to is sitting down to select tax-saving mutual funds.
And we don’t even blame you. There are 40 asset management companies (AMC) or fund houses in India. Between them, there are over a 100 tax-planning funds on offer to the Indian investor. It is easy for anyone to get confused when choosing an ELSS fund to invest in. With time running out on all fronts, no one wants to spend much effort on a tedious and overwhelming thing as choosing a mutual fund.
While it may be so, the good news is that you’ve chosen the right kind of tax-saving investment. ELSS funds earn you the dual benefit of tax-saving and long-term wealth building. ELSS funds are the finest tax-saving investment option available under Section 80C. And for now, we have made it easy for you as far making a choice is concerned. Here are our top 3 tax-saving mutual funds to invest in before 31 March 2016:
- ICICI Prudential Long-term Equity
- Axis Long-term Equity
- Birla Sun Life Tax Plan ‘96
Now let’s understand what makes these funds our top picks.
The single most important factor while selecting any type of equity mutual fund is its long-term performance. While past performance is no guarantee of future returns, it does give a fair indication of how the fund will do. Past performance tells you if the fund has been able to weather all kinds of market conditions or not. More so, bear phases. Any fund will do well in a bull run, but the what separates the great fund managers from the good ones is their ability to come through in falling markets. A good fund would have lost considerably less than its benchmark and peers in a bear phase.
Let’s take a look at some numbers. The Sensex and Nifty hit lifetime highs in the beginning of March last year. Earlier this year, on 11 February, the markets officially entered a bear phase when the major indices went down by 20%. Over this period, Axis Long-term Equity and ICICI Prudential Long-term Equity were down by approximately 9% and Birla Sun Life Tax Relief 96 by approximately 8%.
This is just an example of how good funds are able to shed much less in a bear phase. The historic data of these funds reflects the same kind of performance over good as well as bad times.
Apart from historical performance, the reason behind choosing these three funds is their stable fund management. Ajay Garg has been managing Birla Sun Life Tax Relief 96 since October 2006 and Jinesh Gopani has been managing Axis Long-term Equity since April 2011. ICICI Prudential Long-term Equity got a new fund manager at the helm in 2015,, but it has a strong core team that has been aiding in research and analysis of the fund since its launch. A stable management speaks volumes about a fund’s ability to replicate and sustain its good performance.
Over and above this, all three funds have a growth-orientation and large-cap focus. This is important because the former makes them ideal investments for long-term wealth building and the latter means their portfolio of stocks will not be too risky.
These points put together make these funds the top picks from the ELSS funds category. They are good choices to invest in at any time through the year, but even more so now. You don’t have time on your hands and you need to quickly invest in ELSS funds to save taxes, go with ICICI Prudential Long-term Equity, Birla Sun Life Tax Relief 96 or Axis Long-term Equity.
You can invest in them right away in less than 10 minutes through our online investment platform.