Mirae Asset Tax Saver Fund: Looking for an ELSS Fund away from the crowd?

This is a performance review of Mirae Asset Tax Saver Fund and a comparison with the most popular ELSS fund Axis Long Term Equity. If you are looking for an ELSS fund, rather if your portfolio needs an ELSS fund then Mirae Tax Saver might fit the bill. Sometimes, you need to choose mutual funds on instinct rather than fund performance.

Mirae Asset Tax Saver Fund was launched in Dec 2015. It is managed by Neelesh Surana who also manages their flagship Mirae Asset India Equity, Mirae Asser Emerging bluechip and Mirae Asset Hybrid fund which I recently reviewed. The tax saver fund has an Aum of about 1100+ Crores and has an impressive expense ratio of 0.36% for the direct plan. The investment strategy aims to hunt for growth stocks across the market cap. As required by the finance ministry, all ELSS funds should hold 80% equity at all times. Source: Scheme document

The reason I looked closer into this fund is due to this snapshot from Value Research.

list of ELSS mutual funds with their AUM

Notice how Axis Long Term Equity has the lion’s share of the AUM. That kind of herding is not healthy. This is one reason I chose Franklin Tax Shield to be part of My Handpicked Mutual Funds September 2018 (PlumbLine). It is a low volatile consistent performer. Mirae Tax Saver is an off-beat choice since it does not have much of a history. However, sometimes it is okay to make such decisions IMO. The fund house has a reputation for good performance; the fund manager is the same and ELSS fund is an essential category for all fund houses to attract young earners.

Do you need an ELSS Fund (does your portfolio need one)?

First of all, let us ask if your portfolio needs an ELSS fund. The key to investing is asset allocation. Regardless of your age, if your goal is more than ten years away, it would be prudent to hold 40% and fixed income in your portfolio and 60% in equity. This 40% can from your EPF or VPF or PPF (it can also be NPS with no equity).

  • Now, if you can reach the 1.5L 80C limit just by investing 40% of your investments in fixed income, you do not need an ELSS fund
  • For many young earners, if they invest 1.5L in fixed income, the asset allocation may exceed 40%. In my opinion, this is okay for the first few years of earning as long as there is a decent scope for income increase (so that more can be invested in equity down the line). For this situation also, I think there is no need for an ELSS fund.
  • Only when 1.5L in fixed income would mean above 60% weight in the portfolio, an ELSS fund will be useful.

This review is meant only for those who are looking for a new ELSS fund to invest. If you already hold ELSS funds do not buy another!!

Mirae Asset Tax Saver Fund vs Axis Long Term Equity Fund

Since inception, the Mirae fund has beat both Nifty 200 TRI and the darling of ELSS investors, Axis Long Term Equity.

Mirae Asset Tax Saver Fund vs Axis Long Term Equity Fund normalized NAV movement

Of course, there is not much history to work with and it is not fair to say the Mirae fund is better than the Axis fund. At the very least Mirae Tax saver is not a bad choice. The two-year rolling returns of the two funds is shown below.

Rolling return comparison of Mirae Asset Tax Saver Fund vs Axis Long Term Equity Fund

You can create such graphs for any two funds using this Fund A vs Fund B Rolling Returns Tool

Fingerprint Analysis of Mirae Asset Tax Saver Fund

We can look at the monthly returns of a mutual fund, compare it with its benchmark and evaluate performance in four bins as shown below.

Mirae Tax Saver Vs Nifty 200 TRI (since Dec 2015)

Mirae Tax Saver vs Nifty 200 TRI Fingerprint analysis

That is fairly decent.

Axis Long Term Equity vs Nifty 200 TRI (since Dec 2015)

Axis long term equity vs NIfty 200 TRI fingerprint analysis

The Axis fund also had a similar performance in the same period.

Mirae Asset Tax Saver vs Axis Long Term Equity (since Dec 2015)

Here we compare the two funds and outperform here means the Mirae ELSS fund outperforming the Axis ELSS fund.

Mirae Asset Tax Saver  vs Axis Long Term Equity (since Dec 2015) fingerprint analysis

So, again pretty good. You can create this kind of graphs for your fund with 72 benchmark indices with this tool: Fingerprinting: A Visual Tool for Analyzing Mutual Fund Performance

Video Version of the review

Summary

If you want to choose a fund far removed from where the crowd is investing, Mirae Asset Tax Saver is a decent choice IMO, IF your portfolio needs it (not you) and IF you do not already hold ELSS funds. The only obvious con that I can think of is performance dependence on the fund manager (too many Mirae Funds have the same manager). Since this is an off-beat choice as it is quite new, another less popular option is Franklin Tax Saver is a relatively low volatile consistent performer with a decent track record.

So will you choose this Mirae Fund? What other funds would you like reviewed?

Also check out yesterdays post: Holding too many mutual funds? Easily trim your portfolio with these simple steps The video version is now available

Want to conduct a sales-free "basics of money management" session in your office?
I conduct free seminars to employees or societies. Only the very basics and getting-started steps are discussed (no scary math):For example: How to define financial goals, how to save tax with a clear goal in mind; How to use a credit card for maximum benefit; When to buy a house; How to start investing; where to invest; how to invest for and after retirement etc. depending on the audience. If you are interested, you can contact me: freefincal [at] Gmail [dot] com. I can do the talk via conferencing software, so there is no cost for your company. If you want me to travel, you need to cover my airfare (I live in Chennai)

Connect with us on social media


Do check out my books


You Can Be Rich Too with Goal-Based InvestingYou can be rich too with goal based investing

My first book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create customg solutions for your lifestye! Get it now . It is also available in Kindle format .

Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want

Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you want
My second book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a youngearner

The ultimate guide to travel by Pranav Surya

Travel-Training-Kit-Cover This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for ₹199 (instant download)

Create a "from start to finish" financial plan with this free robo advisory software template


Free Apps for your Android Phone

All calculators from our book, “You can be Rich Too" are now available on Google Play!
Install Financial Freedom App! (Google Play Store)
Install Freefincal Retirement Planner App! (Google Play Store)
Find out if you have enough to say "FU" to your employer (Google Play Store)

About Freefincal

Freefincal has open-source, comprehensive Excel spreadsheets, tools, analysis and unbiased, conflict of interest-free commentary on different aspects of personal finance and investing. If you find the content useful, please consider supporting us by (1) sharing our articles and (2) disabling ad-blockers for our site if you are using one. We do not accept sponsored posts, links or guest posts request from content writers and agencies.

Blog Comment Policy

Your thoughts are vital to the health of this blog and are the driving force behind the analysis and calculators that you see here. We welcome criticism and differing opinions. I will do my very best to respond to all comments asap. Please do not include hyperlinks or email ids in the comment body. Such comments will be moderated and I reserve the right to delete the entire comment or remove the links before approving them.

4 thoughts on “Mirae Asset Tax Saver Fund: Looking for an ELSS Fund away from the crowd?

  1. What if my portfolio needs an elss but I also already have funds managed by the same manager? Should I then look for other elss?

Leave a Reply

Your email address will not be published. Required fields are marked *