to Select ELSS - Equity Linked Savings Scheme?
Equity Linked Savings Scheme are now very popular as tax savings
insruments. A complete tax saving option with good returns & just
three years lock in period makes it really attractive.
When its time to invest, selecting
right fund becomes a tedious job. Its very important to park your funds
in right fund as returns vary significantly for
There are some parametres which one
must look & understand while selecting an ELSS Fund. These
parametres can guide to select a right fund but still final performance
of a fund
can not be assured.
performance of the Fund-
- Though its not necessary
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 shall be
considered. 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-
- In our opinion
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
(Asset under Management)-
Though it cant be said
that funds with
higher AUM perform better, still in our opinion funds having higher AUM
should be safer & if there team of fund mangers is smart, they
should be able to perform better.
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.
What are ELSS-Equity linked savings scheme?