to Select ELSS - Equity Linked Savings Scheme?
Linked Savings Scheme are a very popularTtax Savings Insruments. ELSS
provide a great tax saving option with good returns & just
three years lock in period. As compared to the traditional tax savings
options of Life Insurance, PPF etc. only three years lock in period
makes ELSS really attractive.
Once we decide to invest in ELSS, the diificult task is to select
a fund/scheme which may give good returns as well as is secure. Its very important to park your money
in right fund as returns vary significantly for
Though there is no defined system to judge the performance of a scheme, still there are certain parametres which one
must look & understand while selecting an ELSS Fund. These
parametres can guide you to a great extent to select a suitable fund. Sill one should never forget that final
of a scheme/fund
can not be assured.
performance of the Scheme/Fund-
- Though its not necessary
that a scheme/fund will earn the same as in past but still past
performance plays a
vital role. Performance of a fund for past 3 to 5 years gives an insight
to the management of the fund and must be evaluated while chosing an
ELSS plan. Its a good idea to check for the most consistent performers.
- Compare the past 3-5 years performance of the fund with
funds. Avoid funds which are with a past record of less
than 3 years.
record of the Fund Manager-
of ELSS are managed by different fund managers. These fund managers
plan and invest the funds of the scheme. A smart fund manager will be
able to generate good returns through great investment plans.
- In our opinion
schemes/funds that have a team for fund
management rather then a single fund manager shall be
good fund managemt team/fund manager will be able to invest
intelligently and thereby generate stable returns even in the low
(Assets under Management):
under management popularly called as AUM is the total market value of
the financial assets that a mutual fund invests/manages for its
clients/customers. Higher Assets under management on one hand gives a
sense of security and on the other hand have oppurtunity of better
Though there is no rule that funds with
higher Assets under Management (AUM) perform better, still in our opinion funds having higher AUM
should be safer & if their team of fund managers is good, they
should be able to perform better.
established fund house is a safe and secure bet as their past
performances can easily be tracked and other informations are also
easily available. It is better to chose an
established fund house especially when you want to consider risk
factor. Established fund houses generally have stable returns. Its easy
to track & compare the past records of
- Dont invest all your funds in a single fund, instead
diversify your portfolio to 3-4 schemes.
- Go for growth options of ELSS.
- Investing for a longer term say 5-6 years is
better for maximum returns.
parameters can guide to decide about the ELSS which may possibly have
good returns but nothing is guaranteed. ELSS funds are also subject to
market risks. Its recommended to research well before
finalizing your ELSS fund house.
ELSS-Equity linked savings scheme?