December 2013

Top 10 ELSS Mutual Fund Investments for 2014!!!

Section 80C investments, ELSS, Mutual Funds investments, Tax saving , Tax planning

Most of the investors have begun to ask about investing in ELSS Mutual funds as we are nearing March. As you are aware, ELSS investments can be claimed as deduction u/s 80C (up to a max of 1 lac)

Here is the list of top performing ELSS Mutual funds.The list is based on past 5 years performance One can also choose and invest based on past 3 years performance. Since the ELSS as locked in products for 3 years, it does not make a lot of sense to compare or invest based on performances of less 1 year.

Top 10 ELSS based on 5 years performance are :
Scheme Name
1. ICICI Pru Tax Plan 25%
2. Canara Robeco Equity Tax Saver 22.4%
3. Quantum Long Tax Saving 22.2%
4. HDFC Long Term Advantage 21.8%
5. Franklin India Tax Shield 21.1%
6. L&T Tax Advantage 20.9%
7. Reliance Tax Saver 20.6%
8. IDFC Tax Advantage 20.4%
9. DSPBR Tax Saver 20.3%
10. Birla SL Tax Relief 96 19.7%

Happy Investing…..

 

January 2013

Top ELSS mutual funds for investing in 2013

Top ELSS funds for investing 2013, Mutual Funds, Tax Saver Mutual Funds, HDFC Tax Saver, ICICI Pru Tax saver

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The following ELSS mutual funds can be considered by investors this tax season. Well, actually the best mechanism for investing is to do a SIP throughout the year.

However, incase you are planning on investing in the last few months until 31st March 2013, you can consider the following top performing ELSS funds. And also, if possible continue to SIP for the rest of the year as well for the next financial year.

I have provided the performance measures alongside which will help you make a informed decision.

The article on “How do you compare and evaluate Mutual Fund Performance” might be helpful in case you would like to know more about evaluating mutual funds.

Reliance Tax Saver
Scheme 1 yr 3yr 5yr
Reliance Tax Saver 25.45% 9.34% 8.44%
Inception 22-Sep-05
AUM (31-Dec 2012) 2105 crs
Fund Mgr Ashwani Kumar
Beta 0.98
Std Deviation 19.72%
R squared 89.95
Sharpe Ratio 0.31
Portfolio Turnover 60.80%
Expense 1.90%
Benchmark BSE 100
ICICI Pru Tax Plan
Scheme 1 yr 3yr 5yr
ICICI Pru Tax Plan 24.27% 9.19% 8.51%
Inception 19-Aug-99
AUM (31-Dec 2012) 1468 crs
Fund Mgr Chintan Haria
Beta 0.92
Std Deviation 17.58%
R squared 95.84
Sharpe Ratio 0.26
Portfolio Turnover 148%
Expenses 1.99%
Benchmark S&P CNX 500
Franklin India Tax Shield
Scheme 1 yr 3yr 5yr
Franklin India Tax Shield 22.83% 11.40% 8.37%
Inception 10-Apr-99
AUM (31-Dec 2012) 942 crs
Fund Mgr A Radhakrishnan
Beta 0.79
Std Deviation 15.26%
R squared 95.36
Sharpe Ratio 0.36
Portfolio Turnover 53.60%
Expense Ratio 2.10%
Benchmark S&P CNX 500
Canara Robeco Tax Saver
Scheme 1 yr 3yr 5yr
Canara Robeco Tax Saver 21.82% 6.92% 8.89%
Inception 31-Mar-93
AUM (31-Dec 2012) 456 crs
Fund Mgr Krishna Sanghvi
Beta 0.82
Std Deviation 17.07%
R squared 83.09
Sharpe Ratio 0.15
Portfolio Turnover 45.20%
Expense Ratio 2.33%
Benchmark BSE 100
HDFC Taxsaver
Scheme 1 yr 3yr 5yr
HDFC Taxsaver 17.40% 7.72% 7.17%
Inception 31-Mar-96
AUM (31-Dec 2012) 3448 crs
Fund Mgr Vinay Kulkarni
Beta 0.83
Std Deviation 16.11%
R squared 93.39
Sharpe Ratio 0.17
Portfolio Turnover 25.20%
Expense Ratio 1.85%
Benchmark S&P CNX 500

 ** The Volatility / risk performance measures are of 3 years. Happy Investing.

July 2010

Why you should never invest in ELSS , Dividend Reinvestment Scheme !

Why you should never invest in ELSS , Dividend Reinvestment Scheme, Section 80C, Mutual Fund Investment, Tax Saving Planning.

Equity Linked Savings Scheme (ELSS) is an instrument which many investors use to get advantage in Section 80C, Rs 1 Lac, deduction in Income.

There is a 3 year lock in in these schemes.

If you choose the Dividend reinvestment Scheme, then the reinvested portion gets locked again for 3 years from the date of dividend.

Even if the schemes declare dividends once every three years , part of your investments can be locked in for ever.

Options:

1.  Do not opt for Dividend Reinvestment Scheme in case of ELSS

2. In case you already have invested in such an option in ELSS , then change the option to Dividend Payout. (This is provided you are lucky that the dividend has not yet been declared) (Pls note that Fund House will not allow you to change to Growth)

February 2010

Tax Savings – Section 80C – Part I

Tax Planning,minimizing the tax liability, section 80C, 80CCC and 80CCD,ELSS (Equity linked savings scheme), 5-Yr tax-saving bank fixed deposits (FDs) of banks, PPF (Public Provident Fund), EPF (Employee’s provident fund),Tax season is around the corner.

Tax Planning involves making investments with the objective of minimizing the tax liability and maximizing returns. You should try do tax planning to maximize your income by saving on taxes. Section 80C, of Income Tax Act, 1961, gives a number of options that can be used for the purpose of tax deduction.  The total deduction under this section (alongwith section 80CCC and 80CCD) is limited to Rs. 1,00,000/- (One Lakh).

There are avenues such as ELSS (Equity linked savings scheme), 5-Yr tax-saving bank fixed deposits (FDs) of banks, PPF (Public Provident Fund), EPF (Employee’s provident fund), VPF (Voluntary provident fund), NSC (National Savings Certificates), Various types of Life Insurance schemes, ULIPs (Unit-linked insurance plans), 5-Yr Post Office Time Schemes, NABARD (National Bank for Agriculture and Rural Development Bonds) and Life Insurance Premium

Equity Avenue:

Equity linked savings scheme (ELSS)

This is considered as the one of the best 80C option. It is a mutual fund scheme investing entirely in equities and therefore has the potential to deliver the best returns. There is a 3-yr lock in which is involved in this option. (This is also the shortest lock in period available when compared to other avenues) You can visit the following sites to get more information on the best performing mutual funds in this category www.valueresearchonline.com. Some of consistent good performers in this category are Canara Robeco Equity Tax Saver, HDFC Taxsaver, Sundaram Tax Saver.

Debt Avenues:

PPF – Public Provident Fund

This is a assured returns small saving schemes. Current rate of interest is 8% and the normal maturity period is 15 years. The interest earned on deposits in PPF accounts is fully exempted from income tax. Minimum contribution is Rs 500 and maximum is Rs 70,000. (There is flexibility to make Deposits in installments up to maximum 12 installments) Note that the interest rate is assured but not fixed. The interest and principal in a PPF account cannot be attached by a court decree. Open a PPF account and invest at least the minimum amount of Rs 500, maintain every year, even if you do not intend on using it for investment immediately. The reason is that  after 10+ years, original lock in period of 15 years will get reduced to just < 5 years. And this is of good advantage for parking funds, assured returns, (for short period) at that point in time in future.

EPF – Employee’s Provident Fund

PF is deducted from your salary.You and your employer contribute to it. Your contribution forms part of 80C investments.

NSC – National Savings Certificate

This is a 6-Yr small savings instrument . Rate of interest is 8% compounded half-yearly, so, the effective annual rate of interest is 8.16%. If Rs 1,000 is invested, then it becomes Rs 1601 after 6 years. Minimum amount is Rs 100/-. There is no max limit. The interest accrued every year taxable, Interest accruing annually is automatically reinvested, and such re-invested interest qualify for tax rebate under section 80C of the Income Tax Act.

POTD – 5-Yr Post-Office-Time-Deposit Scheme

Post Office Time Schemes are similar to bank fixed deposits. Scheme offers the facility of investing surplus funds at relatively higher rates of interest. They are available for variable duration like one year, two year, three year and five year. However , 5-Yr post-office deposit qualifies for tax saving under section 80C (This is w.e.f financial year 2007-2008, assessment year 2008-2009). This offers 7.5 per cent rate of interest and the Effective rate is 7.71% per annum (p.a.). The rate of interest is compounded quarterly but paid annually. The Interest is entirely taxable. Minimum amount is Rs 200/-. No Maximum limit.

BTDS – 5-Yr Special Bank Term Deposit

BTDS is the only deposit scheme with banks where tax benefits under section 80C are available to depositors. Interest rate varies from bank to bank. Interest is taxable. Tax is deducted at source. Unlike FD’s , premature exit is not possible. For , as of Feb 2010, Eg: Axis Bank Interest Rates On Domestic Deposit is 7% (7.5% for Senior Citizen). Interest Rate for Tax Saver deposit is 7.25% (8% for Senior Citizen). Minimum amount is Rs 100/-. Maximum amount is Rs 1,00,000/-

POSCS – Post Office Senior Citizen Savings Scheme 2004

Post Office Senior Citizen Savings Scheme (SCSS) is the is meant only for senior citizens.It is the most lucrative scheme. Current rate of interest is 9% per annum payable quarterly.Interest is payable quarterly and not compounded quarterly. Thus, unclaimed interest on these deposits will not earn any further interest. Interest income is chargeable to tax. Minimum amount is Rs 1,000/- and maximum amount is Rs 15,00,000/-.

I will continue this post in next couple of days and cover other avenues as well……