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Seven ELSS Funds that have beat Nifty large Midcap 250 Index

Here are seven ELSS mutual funds that have beat consistently outperformed Nifty large Midcap 250 Index over the last 3, 4 and 5 years. Again, only 7 out of 31 ELSS funds have qualified. If you are looking for an ELSS mutual fund in 2019, then this can be used as a shortlist.

Before we begin: Freefincal in 2018: 250 posts, 1.27 million visitors and 2.45 million page views. Thank you for your support. Wish you all a happy, healthy and peaceful new year.

What is Nifty large Midcap 250 Index?

Out of the top 500 stocks on the NSE in terms of free float market capitalization (Nifty 500), the top 100 are considered “large cap” (Nifty 100), the middle 150 as “mid cap” (Nifty Midcap 150) and rest as “small cap”.

The Nifty large Midcap 250 Index consists of 50% Nifty 100 and 50% Nifty Midcap 150. Here is an example of its performance: Looking for mid cap, small cap value stocks & mid cap growth stocks? Here is an easy way out!

Why use Nifty large Midcap 250 Index as an ELSS benchmark?

ELSS mutual funds can invest across market cap and sectors as long as they maintain a minimum of 80% equity (a finance ministry requirement for ELSS). You will see funds benchmarking themselves with respect to Nifty 50, Nifty/BSE 200 or Nifty 500. Although many ELSS funds do have a large cap tilt, it is not uncommon to see 20-30% mid cap stocks in their portfolio.

If they could benchmark themselves with a Nifty 200 or Nifty 500, evaluating their performance with  50% Nifty 100 and 50% Nifty Midcap 150 is justified in my opinion. If we use easy to beat benchmarks, our shortlist will not be short enough to choose!

Considering that one does not have an Index ELSS fund, there is no harm in looking for ELSS funds that have beat a tougher benchmark in terms of risk and reward.

Seven Best ELSS mutual funds for tax saving (80C) in 2019

The full list of ELSS mutual fund considered

Baroda Pioneer ELSS 96 Plan B(Direct) -Growth Option
Canara Robeco Equity Taxsaver Fund – Direct Plan – Growth Option
HSBC Tax Saver Equity Fund – Growth Direct
Tata India Tax Savings Fund-Growth-Direct Plan
Kotak Tax Saver-Scheme-Growth – Direct
Quant Tax Plan-Growth Option-Direct Plan
ICICI Prudential Long Term Equity Fund (Tax Saving) – Direct Plan – Growth
SBI MAGNUM TAXGAIN SCHEME 1993 – DIRECT PLAN -GROWTH
Sundaram Diversified Equity – A Long-term Tax Saver Fund – Direct Plan – Growth Option
Sundaram Diversified Equity Fund – Direct Plan
HDFC TaxSaver -Direct Plan – Growth Option
LIC MF Tax Plan-Direct Plan-Growth
Principal Tax Savings Fund
BNP Paribas Long Term Equity Fund – Direct Plan – Growth Option
BOI AXA Tax Advantage Direct Plan Growth
Aditya Birla Sun Life Tax Relief ’96 – Growth – Direct Plan
Franklin India TAXSHIELD – Direct – Growth
Quantum Tax Saving Fund – Direct Plan Growth Option
Taurus Tax Shield-Direct Plan-Growth Option
UTI – Long Term Equity Fund (Tax Saving) – Direct Plan – Growth Option
DSP BlackRock Tax Saver Fund – Direct Plan – Growth
Invesco India Tax Plan – Direct Plan – Growth
JM Tax Gain Fund (Direct) – Growth Option
IDFC Tax Advantage (ELSS) Fund-Direct Plan-Growth
L&T Tax Advantage Fund-Direct Plan-Growth
Union Tax Saver Scheme – Direct Plan – Growth Option
Axis Long Term Equity Fund – Direct Plan – Growth Option
Reliance Tax Saver Fund – Direct Plan Growth Plan – Growth Option
Edelweiss Long Term Equity Fund (Tax Savings) – Direct Plan-Growth Option
IDBI Equity Advantage Fund – Growth Direct
Motilal Oswal Long Term Equity Fund – Direct Plan

Screening Steps applied

  • Download the  Dec 2018 freefincal equity fund screener
  • Select “ELSS” as the category to get the above-listed funds.
  • Ask how many funds have a rolling return outperformance score of greater than or equal to 70% with regard to the Nifty large Midcap 250 Index over 5 years. This means that suppose we compute the return over 5Y in 700 different periods, the fund (direct plan) should have beat the index at least 490 times or more.

This single requirement drops, the number from 31 to 9!!

Quant Tax Plan-Growth Option-Direct Plan
Aditya Birla Sun Life Tax Relief ’96 – Growth – Direct Plan
DSP BlackRock Tax Saver Fund – Direct Plan – Growth
Invesco India Tax Plan – Direct Plan – Growth
JM Tax Gain Fund (Direct) – Growth Option
IDFC Tax Advantage (ELSS) Fund-Direct Plan-Growth
Axis Long Term Equity Fund – Direct Plan – Growth Option
Reliance Tax Saver Fund-Direct Plan Growth Plan – Growth Option
IDBI Equity Advantage Fund – Growth Direct

Out of these  Reliance Tax Saver Fund-Direct Plan Growth Plan is special.

  • Next, we demand a downside protection consistency score of greater than or equal to 70% with regard to theNifty large Midcap 250 Index. So here we compare the monthly returns of the fund with the index over every possible 5Y. The fund should have fallen less than the index when the index monthly return was negative with a consistency of 70% or more. See the screener download post for a technical definition.

Eight of those nine funds listed above satisfy this requirement over 5, 4 and 3 years. Except for Reliance Tax Saver. This fund has a downside protection consistency score of 25% (5Y), 21% (4Y) and 33%(3Y). So the message is to avoid Reliance Tax Saver!!

  • Next, we also eliminate  IDBI Equity Advantage Fund as its three-year rolling return outperformance is only 45%. This leaves us with the final list of seven ELSS funds.

Seven ELSS Funds that have beat Nifty large Midcap 250 Index

Quant Tax Plan-Growth Option-Direct Plan
Aditya Birla Sun Life Tax Relief ’96 – Growth – Direct Plan
DSP BlackRock Tax Saver Fund – Direct Plan – Growth
Invesco India Tax Plan – Direct Plan – Growth
JM Tax Gain Fund (Direct) – Growth Option
IDFC Tax Advantage (ELSS) Fund-Direct Plan-Growth
Axis Long Term Equity Fund – Direct Plan – Growth Option

How to choose an ELSS fund from among these seven?

Go to Value Research and sort the ELSS funds by AUM. Axis Long Term Equity has too large an AUM compared to others. So avoid that.

Aditya Birla Sun Life Tax Relief ’96 is an old fund with not too much AUM. Choose that. Or, you can choose DSP Tax Saver.  I am not comfortable with the rest of the AMCs.

The purpose of these posts is to illustrate how easy it is to screen for funds using the Dec 2018 freefincal equity fund screener. Happy new year to all readers.

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Updated: January 1, 2019 — 10:28 am

8 Comments

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  1. why you omitted Mirae asset tax saver from your list of ELSS Funds.

  2. Axis Mutual Long term Fund is performing well though Equity is High and should not be dropped followed By Birla Tax Relief 96 fund. Selection in ElSS category is Tricky as Many funds tend to perform poorly in Bearish Phase.

  3. I am invested in Axis, Birla tax relief 96, DSP, Reliance, ICICI, HDFC. From this fiscal I am putting money only in Axis, Birla and Reliance for tax savers.

  4. Please help to know:
    1. From where to buy index funds? Directly from provider (UTI website for UTI fund and hdfc site for hdfc fund) or from some 3rd party site like Zerodha etc? Which method out of above two will be easy to rebalance index funds periodically.
    2. What is active and passive index investing and which one is better?

    Thanks

    1. Always try to buy funds from the AMC website, it will be cheaper as you will get direct purchase option there.

      If your plans are for more than 10years, then always go for Passive Index fund. As there is no grantee that the fund you choose (active fund) in the long run will beat the Index.

  5. Ah, Reliance Tax Saver. I invested into this fund back when I was planning to have one more ELSS (besides Axis LTE) due to a mere convenience that Reliance shares investment data to my employer to directly for tax exemption. For other funds houses I had to manually upload the transaction report manually periodically.

    It has been performed badly ever since, I have a small corpus in it with CAGR of 4%. I plan to hold it as people call it an aggressive performer in it’s category.

    1. Thanks for sharing

  6. Any particular reason why mirae not considered here Professor?

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