5 tax-saving funds that have given stellar returns in the past 5 years

It is that time of the year when there is a rush among tax savers to invest as they have to submit proofs to their employers. Investors can save tax by investing up to Rs 1.5 lakh under Section 80C of the Income Tax act. With markets in the midst of a bull run, equity-linked savings schemes (ELSS) of mutual funds are increasingly finding takers due to their lowest lock-in period of three years, as compared to other options, such as PPF, NSC and bank fixed deposits. As per data from Value Research, the ELSS category of mutual funds has given an annualised return of 18.03 per cent in the past five years. “ELSS gives you twin benefits of saving tax and helping you meet long term goals,” says Harshvardhan Roongta, a Mumbai-based financial planner. ET brings you five ELSS funds that have performed well in the past five years.

Reliance Tax Saver
3/5-year return: 12.31/22.08
Top 3 holdings: TVS Motor, SBI, ICICI Bank
Fund Manager: Ashwani Kumar
AUM: Rs 9,983 crore

The fund manager identifies companies with high-quality management and promoters who have a good understanding of the underlying business. Typically, 60 per cent of the portfolio is allocated to core large cap companies, while the balance is invested in mid and small cap stocks to generate additional alpha for the portfolio.

Axis Long-Term Equity
3/5-year return: 12.34/22.05
Top 3 holdings: HDFC Bank, Kotak Bank, Maruti
Fund Manager: Jinesh Gopani
AUM: Rs 15,223 crore

The largest fund by assets in the ELSS space, it buys quality stocks with a bias for growth. The fund manager looks for scalable businesses with a high return on capital and structural growth. As compared to peers, the fund manager has a higher allocation to large caps at 70 per cent of the portfolio, and the remaining in midcaps.

BSLI Tax Relief 96
3/5-year return: 15.98/21.66
Top 3 holdings: Sundaram Clayton, Honeywell Auto, Gillette
Fund Manager: Ajay Garg
AUM: Rs 4,266 crore

Following a multicap approach, the fund has 40 per cent exposure to large caps with the balance in mid- and small-cap stocks. The fund manager has a liking for MNC companies given that eight of the top-10 bets are from that theme. These companies with strong parentage, high corporate governance level, zero debt on balance sheet and leadership in their respective lines of businesses give investment comfort at elevated valuations.

IDFC Tax Advantage
3/5-year return: 16.69/20.83
Top 3 holdings: HDFC Bank, Future Retail, ICICI Bank
Fund Manager: Daylynn Gerard Paul Pinto
AUM: Rs 740 crore

The fund manager adopts ‘growth at a relative value’ approach while selecting stocks. Companies are identifi ed after understanding their growth potential and discussions with the management. The fund manager does not hesitate to add new ideas into the fund, given the longer time frame with which investors come. Typically, the portfolio comprises 55-70 stocks and has a long tail, with the top 10 holdings accounting for 28 per cent of the portfolio. About 45-60 per cent of the portfolio is in large caps to give stability to the portfolio, and the balance is parked in mid and small caps to generate alpha for the portfolio.

Tata Tax Savings
3/5-year return: 16.69/20.87
Top 3 holdings: ICICI Bank, HDFC Bank, Future Retail
Fund Manager: Rupesh Patel
AUM: Rs 912 crore

A market-cap-agnostic fund, it eyes quality companies with compounding characteristics. Usually, the fund has a 50:50 mix of large cap and mid cap stocks and in terms of style, it is a blend of value and growth. The core portion of the portfolio is invested in good structural stories, and the balance looks to exploit tactical opportunities. The fund manager runs a diversifi ed portfolio of 60-65 companies with the top-10 ideas accounting for about 30 per cent of the corpus. 16.69/20.87