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Best Tax Saving Mutual Funds for 2010

Investment Yogi : Offers a comprehensive list of the Best Tax Saving Mutual Funds Online in 2010

in India.

What is ELSS (Equity Linked Saving Scheme)?

ELSS, popularly known as Tax Saving Mutual Fund, is a category ofMutual Fund where a major portion is

invested in Equity & Equity related instruments. An investment up to 1 lakh is exempted from income under

section 80C, but there is a lock in of 3 years before you can withdraw. However, there is no upper limit on

investments and long term capital appreciations are tax free. Dividends received are also tax free in the hands of the investor.

ELSS is a great instrument for tax planning which also ensures good returns. But investment should be carefully planned and you

should devote sufficient time in selecting the right fund.

Types of ELSS

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1. Growth: Investor does not get any income during the tenure of the investment. He will get a lump sum amount at the time of

redemption or on maturity.

2. Dividend: Investor gets a dividend from the fund house. He has two options:

He can cash on the dividends.

He can opt for dividend re-investment option.

In most funds you have Growth as well as Dividend options which you can choose depending upon your priorities.

Best Funds

We present the top 7 funds based on last 5 years performance:

Figure 1. Source: Value Research

How to choose a fund for investing?

A good track record is no guarantee for future performance. You should also look at some quantitative measures to evaluate which

fund is good for you.

Expense Ratio: Denotes the annual expenses of the funds, including the management fee, and administrative cost. Lower expense

ratio is better.

Sharpe Ratio: An indicator of whether an investment's return is due to smart investing decisions or a result of excess risk. Higher

Sharpe Ratio is better.

Alpha Ratio: Measures risk relative to the market or benchmark index. For investors, the more positive an alpha is, the better it is.

R-squared: Measures the percentage of an investment's movement that are attributable to movements in its benchmark index. A

mutual fund should have a balance in R-square and ideally it should not be more than 90 and less than 80.


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Figure 2. Source: Value Research

Which fund is best for you?

Choice depends upon your risk profile and priorities. You should make an investment decision based on overall financial planning.

Large Cap Funds: These funds mostly invest in the large cap companies. While this may mean muted returns when the markets are

rising, it also may mean a limited downside when the going gets tough. Franklin India Tax shield and SBI Magnum Tax gain are a

few examples of this type of fund.

Growth Funds: These Funds have about 30% exposure to mid-caps, 10% to small-caps & the rest in large caps in its portfolio.

Hence, it may give a higher return in rising markets. Sundaram BNP Paribas Tax saver is a good option in this category.

Mid-cap Funds: No pain, no gain. These funds have a sizeable exposure to mid-caps and small-caps. This aggressive investment

style can pay rich rewards. Sahara Tax Gain and HDFC Taxsaver are good examples of a fund in this class.

Small Cap Funds: Small-cap stocks can act like performance enhancing drugs. In the above discussed types, the maximum

allocation to small-caps is 12%. However, Taurus Tax shield has invested almost 30% in this high-risk zone. This can be very

rewarding when the going is good, but a dream run can easily become a nightmare. Taurus Tax shield has given 98.01% returns in

last 1 year.

Conclusion

You should do sufficient analysis before taking investment decisions. It should be guided by your overall financial situation, goalsand risk profile. A Financial Plan is recommended before making investment decisions. SIP (Systematic Investment Plan) for a long

time horizon is the most recommended way to invest in equity funds. You should avoid lump sum investments especially when the

market is on a high.

Create your FREE Financial plan before making investment decisions. Click on Start for FREE.

RELATED STORIES:

Section 80C

Best Mutual Funds for investing in India


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Art of Tax Planning

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Investment Yogi : Learn How to invest in Mutual Funds Online in India. A mutual fund investment strategy for today's

economy.

Published Dec 31 2009, 05:47 AM by Yogi

Filed under: Online Tax Planning, Best Mutual Funds, Mutual Fund 2010, Mutual Funds Online, Mutual Fund Investment Online India

Comments

Sumi said:

I really find this website good for understanding finance. I read most of the article written by Surya, and i feel he

writes things in a very easy english which can be understood by any common person.

January 4, 2010 12:23 AM

Guest said:

Written quite well. Just that same thing is explained in a more lucid manner at www.valueresearchonline.com

January 6, 2010 3:54 AM

Deepak Shaw said:

@Guest: With due respect I find ValueResearch full of clutter, especially the home page. This article explains the

same things in a much simpler way.

I guess you are trying to promote Value Research. Do you really need to? The author himself has mentioned Value

research as the source.

January 7, 2010 6:04 AM

Salil said:

This simple english & proper explaination helps me take up my inventment planning seriously. Thankyou so much.

January 15, 2010 4:30 AM

Vikram said:

Simple & concise. The best site I have seen for Personal Finance.

January 18, 2010 12:15 AM


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5/10

Anita Ahuja said:

Very Well Explained :) The stats are pretty cool too.

I have recently invested in UTI Tax Saving Mutual Funds, after reading about UTI's performance & being most

favored by investors - Source The Telegraph. www.telegraphindia.com/.../story_11968236.jsp

January 18, 2010 2:16 AM

Ramesh said:

I appriciate this web site in providing financial advise.

February 2, 2010 5:25 AM

agni said:

very nice &QUITEUSEFULL INFORMATION IN iNVESTMENT AREA


Srikanth Matrubai said:

Read about the best funds in goodfundsadvisor.blogspot.com/.../saving-taxes-elss-is-best-option.html


tanweer said:

is birla sun life tax 96 is good fund to invest please suggest


Harip R K said:

Well written articles. But from where can I get data on all the ratios and alphas for different funds so that I can

evaluate funds in future based on these criteria

March 6, 2010 7:51 AM

sunil kumar singh said:

the terms and plans are explained in a lucid manner.Pl guide best mutual funds to invest on monthly basis and tax

free.

March 7, 2010 8:01 AM

Yogi said:

@Harip @Sunil:

You can click on our Mutual Fund tab and search for the Fund you are looking for. Click on the fund name and you

will find these ratios under the details

Hope it helps!

@Tanveer: Although the fund mentioned by you has a good track record but you should see your risk profile and

investment objective before taking that call.

March 9, 2010 1:19 AM


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g.n.yoganarasimhan be(civil)mie,fiv,pgdv said:

A highly informative article written in short but sweet . thank you very much for the prompt reply.Can you please

suggest any agent in and around Girinagar,Bangalore560085 for investment.

March 16, 2010 11:23 PM




March 16, 2010 11:23 PM




March 16, 2010 11:23 PM

G Dutt said:

I wish to invest about 11,000 for 80c tax saving. Please advise best fund. [email protected]

March 18, 2010 5:45 AM

premlal said:

the information presented is quite useful, as many of us are unaware of investments other than banks, insurance, etc.

March 19, 2010 5:19 AM

Bhadru G said:

I Really Happy this website good for understanding iNVESTMENT aREA, I appriciate this web site in providing

financial information and very nice information in investment area. So i THANK YOU SO MUCH.

April 13, 2010 7:20 AM

GIRISH kUMAR said:

iTS GREAT,IT HELP PEOPLE TO GET A CONCRETE PICTURE ABOUT BEST PERFORMING FUNDS ININDIA.

May 8, 2010 9:04 AM

Swetha said:

hi,

I have invested in Sundaram BNP tax saver under the dividend pay out investment option. Can i change the

investment option to growth now?

May 15, 2010 7:19 AM

anil said:

It is a fantastic site to understand the basics of investment in a very simple and convincing language.It also helps inunderstanding some very important termiloogy in the simplest words.It is definitely a good sight for investment.

June 1, 2010 9:51 PM


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Naveen Rawat said:

please tell me should i quit from LIC ULIP money plus plan or i continue the plan for 5 year because i already paid

for 4 year.

please suggest.

June 11, 2010 1:24 AM

tony said:

Hi, I often visit your site for information. This let me to create another blog which gives a full list of all available

mutual funds in one page with it's daily NAV. I update this list DAILY with some outsource help from INDIA.

does this make sense ? it's at listmf.blogspot.com

Your blog give a detail analysis and my blog provides a simple full list of offered mutual funds in specific

currency(INR, SGD etc.) I was wondering if I could link specific schemes to your specific blog posts for details.

do write me back in my "about us" comment if interested.

Tony Parera

June 13, 2010 12:56 AM

Manthenanil said:

Thanks for keeping us update on the things going at mutual funds end by providing such valuable information.

July 20, 2010 12:34 AM

Maheshwar said:

Very good and helpful information.

My gross income is around 12 lakh per anum. Under 80 C, approximately Rs. 70000/- and Rs. 60000 is deducted for

EPF and Post Retirments Schemes. In addition I invest Rs. 36000/- in PPF and Rs. 67000 in two different LIC

policies.

I wish to invest in two of ELSS among Canara Robeco Equity Tax Saver, HDFC Tax Saver, Birla Sun life Tax relief

and Magnum tax gain etc, as I don't want to keep in money in my savings acount, which gives 3.5% interest. Since

there is no advatange from exemption 80 c point of view, shall I go for ELSS ?

July 21, 2010 12:49 PM

chirag said:

really so lucid explanation

July 23, 2010 10:27 PM

PRAKASARAO said:

i WANT TO INVEST AROUND 25 TO 50K IN ELSS.

PLEASE SUGGEST ME WHICH ONE IS GOOD

August 11, 2010 9:00 AM

SANDEEP JAIN said:

sir,

i am in job. i want to purchase mutual funds for Rs.25000 to invest for saving tax for


10 1/10/2011 7:51 AM


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plz guide me, which mutual funds i can invest to get good returns.

thanks

waiting for reply

sandeep

August 24, 2010 4:46 AM

Madasu lakshmi narayana said:

As on date which is the best Tax Saver Mutual Fund

September 28, 2010 12:44 PM

Best ELSS Scheme said:

For the best mutual funds as of date you should go to www.investmentyogi.com/.../default.aspx and check for

yourself. It has the latest details about the funds in India. There are also articles on how to select best performing

mutual funds

October 1, 2010 1:22 AM

AMIT KUMAR said:

I am in job. i want to purchase mutual funds for Rs.35000 to invest for saving tax for

plz guide me, which mutual funds i can invest to get good returns.

thanks

waiting for reply

AMIT KUMAR

November 26, 2010 1:04 AM

sudhakar said:

i havr question . i have tax gain mutual fund and i want do sip now on this mutual fund could u tell me whether i can

claim tax for year 2010

December 18, 2010 6:37 AM

Babu said:

Is LIC Endowment plus the best for money invest for high growth achievement?

January 4, 2011 12:44 AM

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