18 ELSS mutual funds beat their benchmarks in 10 years; offer 12-17% returns

We are at the fag end of the tax saving season. Taxpayers only have a week left to invest in tax-saving instruments to save income tax in this financial year. Here we would discuss one of the best tax saving options: tax saving or tax planning mutual funds or Equity Linked Saving Schemes (ELSS) that have offered investors around 13.35% returns over a long period of 10 years.

For late comers, you can save income taxes of up to Rs 1.5 lakh in a financial year. You can invest in certain specified investments like Public Provident Fund, five-year tax saving bank deposits, ELSS, among others if you want to save taxes in this financial year. Make sure you are choosing an option that matches your investment horizon and risk profile. If you are looking to invest for a period of at least five years and ready to take risk, you can choose ELSS funds.

The ability of actively-managed equity schemes to beat their benchmarks has become a hotly debated topic in the last few years. Many actively-managed schemes, especially those in the large cap category, have been struggling to beat their benchmarks in the last few years. This has resulted in proliferation of passively-managed schemes or index-based investment strategies. Many individuals have been opting for passive investments in the last few years.

That is why ETMutualFunds decided to take a look at the ELSS category to see whether the schemes in it managed to beat their benchmarks over the 10-year period. There were 27 schemes in the ELSS category that have completed 10 years of existence. Around 67% of schemes or 18 out of 27 schemes managed to beat their benchmarks in the 10 year period. We considered daily rolling returns in 10 years to get a better picture. ETMutualFunds considered daily rolling returns of these 27 schemes for a period of 10 years from March 21, 2013 to March 21, 2023.

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Here’s the list of ELSS schemes that have outperformed their benchmarks in 10 years:

Scheme Name	Scheme returns (%)	Benchmark	Benchmark return (%)
Axis Long Term Equity Fund	17.01	NIFTY 500 – TRI	12.99
ICICI Prudential Long Term Equity Fund (Tax Saving)	15.81	NIFTY 500 – TRI	12.99
Franklin India Taxshield Fund	15.56	NIFTY 500 – TRI	12.99
Invesco India Tax Plan Fund	15.19	S&P BSE 500 – TRI	6.27
Bandhan Tax Advt(ELSS) Fund	14.91	S&P BSE 500 – TRI	6.27
SBI Long Term Equity Fund	14.87	S&P BSE 500 – TRI	6.27
DSP Tax Saver Fund	14.87	NIFTY 500 – TRI	12.99
HDFC TaxSaver Fund	14.38	NIFTY 500 – TRI	12.99
Canara Robeco Equity Tax Saver Fund	14.13	S&P BSE 500 – TRI	6.27
Aditya Birla Sun Life Tax Relief ’96 Fund	13.83	NIFTY 500 – TRI	12.99
Nippon India Tax Saver (ELSS) Fund	13.49	NIFTY 500 – TRI	12.99
Union Long Term Equity Fund	13.45	S&P BSE 500 – TRI	6.27
Bank of India Tax Advantage Fund	13.43	S&P BSE 500 – TRI	6.27
HSBC ELSS Fund	13.34	NIFTY 500 – TRI	12.99
Sundaram Tax Savings Fund	13.30	NIFTY 500 – TRI	12.99
Taurus Tax Shield Fund	12.93	S&P BSE 500 – TRI	6.27
JM Tax Gain Fund	12.38	S&P BSE 500 – TRI	6.27
Quantum Tax Saving Fund	12.14	S&P BSE 500 – TRI	6.25

Source:ACE MF, Rolling returns as on March 21, 2023Note, the above exercise is not a recommendation. This study was done to see whether these schemes have succeeded in beating their benchmarks over a long period of time. In simple terms, did these actively-managed schemes succeed in beating their benchmarks to justify their fees. And we are happy to report a majority of these schemes passed the test. For our recommendation list, read: Best ELSS funds to invest in 2023. Always remember to invest according to your goals, investment horizons, and risk profile. Don’t look at tax planning in isolation. It should be part of your overall investment plan.

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