ELSS is the best tax saving investment. But, Every ELSS is not best for you. Neither, the best ELSS of 2015 would necessarily remain best ELSS in 2016. The market condition and mutual fund managers change, Hence you need a review to your ELSS SIP. In this post, I will find out the best ELSS to invest in 2016. First, let us assess, how would be the year 2016 for mutual funds.
The year 2015 was not good for the share market. The market was very volatile and it could not continue the rally of 2014. The high expectation from Modi government receded. It had to face the global economic reality and domestic politics. Now, the market does not expect any revolution from the Modi government. There would be progress in the economic growth, but the pace would be gradual. Thus, we are not going to see any extended rally in the stock market. But, 2016 is going to be better than 2015.
The large cap stocks remain subdued in 2015. Midcap has given a far better return. So, the year 2016 can be of the large caps.
- 1 Way To Best ELSS
- 2 Top 10 ELSS To Invest in 2016
- 3 Best Tax Saving Mutual Fund To Invest In 2016- Final List
- 4 Birla Sun Life Tax Plan Growth
- 5 Axis Long Term Equity Growth
- 6 DSP BlackRock Tax Saver Fund
Way To Best ELSS
The seventh pay commission will give extra money into the hands of the public. This extra money will benefit, consumer goods and property sector. Therefore, we would see the better days for consumer-oriented sectors.
Government spending will also give a boost to the infrastructure sector. Hence, you can expect a recovery in the infra stocks as well.
While picking the best tax saving mutual fund to invest in 2016, I am going to keep these factors in mind. However, the initial stage of ELSS selection would consider the basic filters.
Top 10 ELSS To Invest in 2016
Tax Saving Mutual Fund
Annual Return (%)
|1 Year||3 year||5 year|
|1||Axis Long Term Equity||3.55||26.06||18.29|
|2||Birla Sun Life Tax Relief 96||6.24||22.54||11.54|
|3||Birla Sun Life Tax Plan||5.37||21.6||13.15|
|4||Religare Invesco Tax Plan||2.31||21.24||13.09|
|5||BNP Paribas Long Term Equity Fund||3.28||20.45||14.3|
|6||Franklin India Taxshield Fund||2.09||20.2||13.65|
|7||ICICI Prudential Long Term Equity (Tax Saving)||−0.04||20.12||12.82|
|8||DSP BlackRock Tax Saver Fund||1.36||19.26||11.44|
|9||IDFC Tax Advantage (ELSS) Fund||2.91||19.17||12.08|
Above top 10 ELSS is selected on the basis of performance. I have reached to this list after applying the filter of above average return in one year, 3 year and 5 year period.
I have chosen only growth fund as dividend funds are the replica of its sibling growth fund.
You can see the top ten most beneficial fund during last 5 years. The funds are arranged on the basis of 3-year return.
However, Mere return of ELSS fund should not be the criteria to select the best elss to invest. The past performance of a fund is not a guarantee of the future performance. Hence, we have to filter this list on the basis of other parameters.
Top 7 Tax Saving Mutual Fund to Invest
The risk is important factor while picking the best ELSS or tax saving mutual fund. These 7 mutual funds are those ELSS which are not very risky. These are the funds which took average or below average risk. I have excluded the ICICI Prudential Long Term Equity Fund, Birla Sun Life Tax Relief 96 Growth and Edelweiss ELSS Growth because they took above average risk. After this exclusion, we have 7 top ELSS to invest in 2016.
|1 year||3 years||5 years|
|1||Axis Long Term Equity||Below Average||13.34||3.55||26.06||18.29|
|2||Birla Sun Life Tax Plan||Average||14.37||5.37||21.6||13.15|
|3||BNP Paribas Long Term Equity||Average||14.65||3.28||20.45||14.3|
|4||DSP BlackRock Tax Saver Fund||Average||14.52||1.36||19.26||11.44|
|5||Franklin India Taxshield Fund||Low||13.4||2.09||20.2||13.65|
|6||IDFC Tax Advantage (ELSS) Fund||Average||13.9||2.91||19.17||12.08|
|7||Religare Invesco Tax Plan||Average||14.97||2.31||21.24||13.09|
Top 6 ELSS To Invest
After the generic filter of performance and risk, now we need some specific filter for 2016. As I have discussed above, in 2016 we need a fund which prefers large-cap shares. Therefore, I have excluded the funds which invest heavily in the mid or small cap. Among the top 7 ELSS, only IDFC Tax Advantage Fund prefers midcap shares. Hence, it goes out from top ELSS list.
|1 year||3 years||5 years|
|1||Axis Long Term Equity||3.55||26.06||18.29|
|2||Birla Sun Life Tax Plan||5.37||21.6||13.15|
|3||BNP Paribas Long Term Equity Fund||3.28||20.45||14.3|
|4||DSP BlackRock Tax Saver Fund||1.36||19.26||11.44|
|5||Franklin India Taxshield Fund||2.09||20.2||13.65|
|6||Religare Invesco Tax Plan||2.31||21.24||13.09|
Best Tax Saving Mutual Fund To Invest In 2016- Final List
2016 would be a good year for consumer goods as people will have more money in their hands. This money will benefit the consumer goods company and mutual funds which have invested heavily in this sector. Among my top 6 ELSS fund, I also compared them on the basis of investment in consumer goods sector.
Birla Sun life Tax plan is the fund which have invested 1/4 of its portfolio in consumer goods sector. Axis long term equity and DSP Blackrock Tax Saver has also given good weightage to the consumer goods companies.
Finally, this is the best 3 ELSS to invest in 2016.
Annual Return (%)
|1 year||3 year||5 year||Weightage (%)|
|1||Birla Sun Life Tax Plan Growth||5.37||21.6||13.15||25.76|
|2||Axis Long Term Equity Growth||3.55||26.06||18.29||21.23|
|3||DSP BlackRock Tax Saver Fund Growth||1.36||19.26||11.44||18.22|
I haven’t used any filter to judge the fund house reputation. But, it is not mere coincidence that these top 3 best equity linked savings scheme belong to reputed and professional fund houses. Among these three, the Axis Long Term Equity is a newer fund, but it has performed extremely well in last three years. Axis Long Term Equity has given far better return with below average risk. If this would have been a ranking on the basis of past performance, the Axis Long Term equity would have topped. But We have to see in the future. I find Birla Sun Life Tax Plan better placed to give you a higher return.
Let us have a closer look at these ELSS.
Birla Sun Life Tax Plan Growth
The Birla Sun Life Tax Plan is top tax saving fund among best ELSS to invest in 2016. It is one of the oldest tax saving mutual fund launched in 1999. Since inception, it has given annual 20% return. Earlier it was a dividend only fund, But since 2006 It gives growth option as well. It has assets of Rs 280 crore.
The Morningstar has given it 4-star rating while Valueresearchonline 5-star. The Fund manager Ajay Garg is managing this fund since October 2011. Following are the lines taken from the website of Birla sun life.
Birla Sun Life Tax Plan (BSLTP) aims at achieving long term growth of capital along with Income Tax benefits for investors. It follows a bottom-up approach to investing, where the emphasis is on identifying companies in quality businesses with a strong competitive position and run by quality management. Essentially the focus is on long term fundamentally driven values. The fund offers superior growth opportunities. Since investments are planned for a 3 year period it helps the Fund Manager to take a long term view while selecting stocks and not remain constrained by short term liquidity pressures.
The existing investor of Birla Sunlife Mutual Fund can invest in this fund through the online mode. To invest online in BSL Tax Plan, you need a folio number.
Axis Long Term Equity Growth
Axis Long Term Equity Growth is one of the best ELSS to invest in 2016. It was launched in 2009 by the Axis Mutual Fund Company. After initial change in fund manager, the Jinesh Gopani is managing this fund since 2011.
During last 3 years, the fund has given an outstanding performance. Since the launch, it has also given annual 20% return.
The value research online has given it the 5-star rating. While Morningstar has given it the 5-star rating. The ELSS took below average risk and gave a high return. Following is text from Axis website.
The fund looks at companies that can sustainably grow profits and generate wealth over 3-4 years. This allows the fund manager to overlook short term volatility of the stock price as well as any temporary hiccups in the company’s earnings. Further the fund manager works completely on a bottom-up basis i.e. judging individual stocks purely on their prospects without trying to worry about the overall market direction or what the market benchmarks are doing. This has allowed the fund to create tremendous value for investors since its inception.
The existing investor can invest in this scheme online. While new investor has to submit the application offline. After the first investment, the subsequent investment can be done online.
DSP BlackRock Tax Saver Fund
The fund came into the existence in 2007. Since the inception, it has given 14% annualized return. It has assets of Rs 1110 crore. The DSP Blackrock Tax Saver Fund has invested heavily on bank shares. About 10% of its holding is of HDFC bank shares.
The fund is managed by the Rohit Singhania. He is a new mutual fund manager and managing DSP Blackrock Tax Saver fund since July 2015. The fund manager is the weakest link of this fund. He has to prove yet.
The Value Research and Morningstar have given this fund a 4-star rating.
Like, all the above tax saving mutual funds, the existing investor of DSP Blackrock mutual fund can avail the online investment facility. Once you have a folio number, you can invest in any of DSP Blackrock fund online. The new investor is required to send the physical form to its office.
Finally, You have the best tax saving mutual fund or ELSS to invest in 2016. The Birla Sun Life Tax Plan is the winner among 40 ELSS. The Axis Long Term Equity has been best performer during last 3 years. It has the potential to give better returns.
However, If you are an investor who prefers SIP mode to invest in the tax saving mutual fund, you should also read my post on best ELSS SIP to invest.