ELSS investment rationale
ELSS (equity-linked savings scheme) mutual fund is a type of mutual fund which is preferred by investors for its tax-saving feature. The tax deductions facility is provided under Section 80C of the Income Tax Act. An investor can get up to Rs. 1,50,000 tax rebate and will also be eligible to save up to Rs. 46,800 tax yearly by investing in the ELSS mutual funds. Under this investment, the fund house will allocate around 65% of the portfolio into the equity or equity-linked securities, with a marginal allocation in the fixed-income securities. However, these funds will have a lock-in period of three years.
Importantly in the case of ELSS or any other mutual funds, NAV and AUM should be analyzed by the investors.
Quant Tax Plan – Direct Plan-Growth
Quant Tax Plan – Direct Plan is a mutual fund SIP investment that has a NAV of Rs. 254.35, and the size – Of assets Under Management (AUM) of this fund is Rs. 1166.17 crore. On the other hand, the Expense Ratio (ER) of this fund is 0.50%, while the category average is 1.12%. The ER is significantly lower than the category average, so it can enhance the profitability of the investors.
AUM is the total market value of the assets which a mutual fund will manage at a point in time. The Expense Ratio is the percentage, which the fund house will use from the retail investors’ investments, for fund management purposes.
This ELSS mutual fund SIP has been best rated with 5 Star by rating agency Crisil.
Absolute and annualized returns
As it is an ELSS fund, its absolute returns from SIPs have been reported higher in the long term. In the last 1-year SIP return stood at 16.33%, in the last 2 years it has fetched 70.16% returns, in the last 3 years it has given 104.8 % returns, in the last 5 years, it has fetched 135.1% returns. Annualized returns from Quant Tax Plan – Direct Plan’s SIP were 60.91% in the past 2 years, and 52.57% in the past 3 years.
Quant Tax Plan – Direct Plan’s absolute mutual fund returns are highest in 10 years terms. In the last 1 year return stood at 48.72%, in the last 2 years it has fetched 218.13% returns, and in the last 3 years, it has given 164.81% returns, in the last 5 years it has given 217.17% returns. In the past 2 years, the Quant Tax Plan – Direct Plan’s annualized returns stood at 78.36%, sharply outperforming the category average at 47.66%.
(Data till April 13, 2022)
Quant Tax Plan – Direct Plan’s total equity holding is 90.16%, and the rest of the 9.83% is invested in other sectors. Among a total of 47 stocks, the Fund’s Large Cap Investments are 44.32%, Mid Cap Investments are 18.03%, Small Cap Investments are 18.31%; and 9.50% investments are allocated to other funds.
The top 10 equity holdings of the fund are Vedanta Ltd., Adani Enterprises Ltd., Ruchi Soya Industries Ltd., State Bank Of India Banks, Adani Ports And Special Economic Zone Ltd., ICICI Bank Ltd., ITC Limited, Coal India Ltd., Larsen & Toubro Ltd., and Indian Hotels Company Limited.
Other funds under this category are, Union Long Term Equity Fund – Direct Plan-Growth, IDFC Tax Advantage (ELSS) Fund – Direct Plan-Growth, Mahindra Manulife ELSS Kar Bachat Yojana – Direct Plan-Growth.
Investing in equities/mutual funds/SIPs/debts poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, and the author are not liable for any losses caused as a result of decisions based on the article.