Axis Long term Equity Fund is my favourite tax saving mutual fund. Its performance has really impressed me a lot. It has many good qualities of a top mutual fund. I consider it one of the best ELSS to invest. But I have to prove it through the hard facts. I need to compare Axis Long Term Fund with other top ELSS. In this article I will compare the Axis Long Term Equity Fund with its peer on various parameters.
- 1 The Comparison of ELSS
- 2 Performance Of Axis Long Term Equity Vs Others
- 3 Risk Comparison of Top ELSS
- 4 Fund Management Charges
- 5 Fund Management
The Comparison of ELSS
Axis long term Equity fund or any other Equity linked saving scheme is a tax saving diversified mutual funds. It is a long term wealth building method. Moreover, it saves tax every year. It is one of the best tax saving option.
The comparison of ELSS is slightly different from the comparison of other equity diversified funds. It is because of the objective and different nature of funds.
An investment in ELSS is locked for 3 years. People invest in these funds, primarily to save tax. Therefore, an ELSS does not have the constant pressure of performing. It can take long term bets. It also does not have the pressure of redemption.
The fund manager of ELSS has more scope to take the bold steps. Therefore, we must expect a better performance of ELSS than other equity diversified mutual funds.
From the perspective of an investor, an ideal ELSS should give the consistent return. Most of the investors invest in ELSS through the SIP mode.
There are 38 tax saving mutual funds in the market. Choosing best among them or comparing them is not an easy task. Comparison among all the 38 ELSS is not feasible. Therefore, I will take the top 5 ELSS of last 3 years. The comparison of these ELSS would be on the below criteria.
- Performance of Mutual fund in last 3 and 5 years
- Comparison of SIP returns in last 3 years.
- Risk taken by the ELSS
- Star rating by mutual fund research companies
- Fund management charges
Must Read: Best ELSS to Invest in 2016
Performance Of Axis Long Term Equity Vs Others
Why do we want to invest in Equity linked saving schemes? Why do we choose ELSS instead of PPF, NSC and tax saving FD? We go for the ELSS in the hope of Better return. The more money is the only attraction of the ELSS. Therefore, at the end of the day, the best ELSS is one which gives you most return.
Thus, the first criteria of our comparison should be the performance. I am going to pick 5 top ELSS which have given the best return in last 3 years. Further, I will compare these tax saving mutual funds on other parameters.
Top 5 ELSS On the Basis Of 3 Year Return
|ELSS||Annual Return (%)|
|Axis Long Term Equity||29.42|
|Birla Sun Life Tax Relief 96||24.54|
|Religare Invesco Tax Plan||24.00|
|BNP Paribas Long Term Equity Fund||23.86|
|Birla Sun Life Tax Plan||23.56|
|ELSS Category Average||19.53|
You can see that among the top five equity linked saving schemes, the Axis Long Term Equity Fund is way ahead from the category average. The ELSS category has given average 19.53% return while Axis Long Term Equity Fund has given 29.42%, a difference of 10%.
On the other hand, the Axis Long Term Equity fund has given 29.42% return whereas its nearest competitor the Birla Sun Life Tax Relief 96 has given 24.54% return. The difference is big 5%, whereas, other 3 ELSS are very close to the Birla Sun Life Tax Relief 96.
Useful: ELSS Mutual Fund Schemes Return Calculator
For greater assurance, we should again compare the performance of Axis Long Term Equity fund with other ELSS in five year period.
5 Year Return of Top ELSS
|ELSS||Annual Return (%)|
|Axis Long Term Equity Growth||19.07|
|BNP Paribas Long Term Equity Fund Growth||14.05|
|Franklin India Taxshield Fund Growth||14.04|
|Religare Invesco Tax Plan Growth||13.2|
|Birla Sun Life Tax Plan Growth||12.88|
|ELSS Category Average||9.72|
Should we give the trophy of best performing ELSS to the Axis Long Term Equity Fund? Is there any other way to gauge the best performance? Yes, there is. The 3 year or 5 year return do not show the complete picture. A single year fillip can improve the overall performance of a mutual fund. But, we want a consistent performer.
Hence the year-wise performance of ELSS fund would give the complete picture.
|Axis Long Term Equity||29.99||-14.76||33.68||16.51||66.18|
|Reliance Tax Saver||22.49||-24.23||46.05||3.47||83|
|IDFC Tax Advantage||23.96||-23.33||36.22||15||42.21|
|Birla Sun Life Tax Relief||13.5||-29.61||36.55||9.09||54.55|
|Religare Invesco Tax Plan||22.13||-18.92||30.31||10.13||54.3|
Chart Of Year Wise Performance
Axis long term equity fund was the best performer in 3 years out of five. While Reliance tax saver was top performer in 2 years.
The Axis Long Term Equity Fund is the only ELSS which has beaten category average return in all last five years. The gap between the category average and Axis Long Term Equity fund was always wide. The year 2013 was a not so good phase for the ELSS. The category average return was only 6.53%. The Reliance Tax saver has given only 3.47%, but the Axis Long Term Equity Fund has given very good 16.51% return.
Finally we should also assess the return of the tax saving mutual fund for the SIP. I have taken time period of 3 years as people invest in this mutual fund at least for 3 years. You can see the SIP returns are better than the lump sum investment. The market condition of last three years was suitable for the SIP investment. SIP investment has many other benefits as well.
SIP Return Of Top ELSS in Last 3 Years
|ELSS||Annual Return (%)|
|Axis Long Term Equity Growth||33.07|
|Birla Sun Life Tax relief 96||28.5|
|Religare Invesco Tax Plan Growth||27.26|
|Franklin India Taxshield Fund Growth||26.98|
|BNP Paribas Long Term Equity Fund Growth||26.48|
Again In this parameter, the Axis LT Fund is the winner.
Finally on this date (5 October 2015) the Axis Long Term Equity fund has beaten all of its peers in the performance during last 5 years.
Risk Comparison of Top ELSS
The Reliance tax saver was best performer in 2012 and 2014. But it is the same fund which was worst performer in 2013. What does it mean? It means Reliance Tax Saver is a risky fund. It goes down and up very swiftly.
The risk of fund is measured through the Beta and standard deviation. I would not overwhelm you by these technical terms. For common investor it is enough to know the ‘risk level’ of different fund.
The mutual fund research company Morningstar classify the mutual fund schemes risks as low, average, below average, above average and high. This classification is in the respect of category average. Let us see the classification by the Morningstar
Risk of Axis Long Term Equity Vs Top ELSS
|Axis Long Term Equity||Below Average|
|Reliance Tax Saver||High|
|IDFC Tax Advantage||Above average|
|Birla Sun Life Tax Relief||Average|
|Religare Invesco Tax Plan||Average|
You can see the Axis Long Term Equity Fund takes less risk than category average. While Reliance Tax saver takes excessive risk. The performance of these funds also established these facts. The Reliance tax saver swings wildly with market sentiment. Whereas Axis Long Term Equity shows greater stability. Birla Sun life Tax Relief and Religare Invesco also don’t take excessive risk.
Also Read : Top 5 ELSS On The Basis Of Risk
Fund Management Charges
Every year fund management charge is taken from the corpus of the fund. It affects your mutual fund return. In the long term fund management charges can make big difference. Therefore you must know the fund management charge of the ELSS. Normally the fund management charge of an ELSS is higher than other equity diversified mutual fund. But a mutual fund company can’t charge more than 3%. In the following table you can see that all the top mutual fund scheme have fund management charge between 2-3%. Reliance Tax saver has the lowest fund management charge among these. Axis Long Term Equity charges slightly less than IDFC Tax Advantage and Religare invesco Tax plan.
|ELSS||Fund Management Charge (% of AUM)|
|Axis Long Term Equity||2.78|
|Birla Sun Life Tax Relief||2.39|
|IDFC Tax Advantage||2.92|
|Reliance Tax Saver||2.33|
|Religare Invesco Tax Plan||2.9|
The mutual fund schemes are assessed on several parameters. There are companies which specialize on mutual fund research. These companies give star rating to the mutual fund schemes. If more than one mutual fund Research Company assigns good star rating to a mutual fund scheme, it would be more reliable mutual fund scheme. In the following table I am giving star rating assigned by the mutual fund research companies to the ELSS.
The crisil doesn’t give star rating in real sense, rather it give ranking to the mutual fund companies. For your convenience I have converted Crisil ranking into star ratings.
|Star Rating of Top ELSS|
|Axis Long Term Equity||★★★★★||★★★★★||★★★★★|
|Reliance Tax Saver||★★★★||★★★★||★★★★★|
|IDFC Tax Advantage||★★★||★★★★★||★★★★|
|Birla Sun Life Tax Relief||★★★★||★★★★||★★★★|
|Religare Invesco Tax Plan||★★★★★||★★★★★||★★★★|
Axis long term Equity fund is the only equity linked saving scheme which has got 5 star rating from all the three mutual fund research companies. Reliance Tax saver has got five star only from the Morning star. Crisil and Value Research have given 5 stars to the Religare Invesco but Morning star has given only four stars to it.
These star rating are at the time of writing this article. If your find any change, please intimate me by writing a comment.
The Consistent management gives consistent performance. The stability of fund manager gives direction to the mutual fund scheme. In my post Top 7 Qualities of Best Equity Linked Saving Scheme (ELSS) I have outlined the importance of fund manager.
The Tenure Of Current Fund Manager
|Axis Long Term Equity||Jinesh Gopani||4.6|
|Birla Sun Life Tax Relief||Ajay Garg||8.11|
|IDFC Tax Advantage||Aniruddha Naha||2.5|
|Reliance Tax Saver||Ashwani Kumar||10|
|Religare Invesco Tax Plan||Vetri Subramaniam||6.9|
Except IDFC Tax Advantage, all the top ELSS has long tenure with the mutual fund scheme. Reliance tax saver has longest serving fund manager. Considering only 5 years of the inception the fund manager of Axis Long Term Equity is also consistent. The effect of new fund manager of IDFC Tax advantage can be seen in the performance of the fund. Among the top 5, the IDFC Tax Advantage has given least return in 2014.
Choosing the overall topper is not that tough as I have assumed the Axis Long Term Equity Fund is definitely the best ELSS in 2015. In 2016, I will once again revise this article. Hopefully, the Axis Long Term Equity will continue its dream run.