Equity Linked Saving Schemes (ELSS) have a mandatory lock in period and the investor can claim 80C deductions by investing in this instrument. It is not a very good idea to look at the performance of a ELSS fund unless the investment period had crossed 3 years. But for the benefit of the investors who are curious about the performance of different ELSS schemes we are taking a look at the performance of ELSS schemes in the last one year.
Most of the Asset Management Companies (AMC) offer ELSS schemes and they have similar rules but the performance varies due to the investment philosophies of the fund managers. Some fund managers may offer ELSS in the form of a balanced fund (a mix of debt and equity assets) while others may offer it as a growth fund. ELSS funds are generally not the best performing funds as the fund managers try to minimize loss.
Let us not take a quick look at the performance of ELSS funds offererd by different AMCs. There are 37 ELSSes on offer and their performance has ranged between -27.34% to -1.27%. Nippon India Tax Saver (ELSS) Fund has given the worst performance in the last one year. The NAV has dropped by a whopping 27.34% which is quite bad for a fund which looks at minimizing loss. The fund has Reliance Industries in its portfolio, but it also has stocks of companies like Tata Steel, Tata Motors and Bharat Forge, which have been beaten down badly the the market, in the portfolio. The fund manager, Mr. Ashwani Kumar, hasn't had a great luck in picking stocks for the fund's portfolio.
The story of most of the other funds too has been similar. NAV for funds such as IDFC Tax Advantage (ELSS), HDFC TaxSaver Fund, Sundaram Diversified Equity and Quantum Tax Saving Fund also have dropped by more than 20%, Sundaram Diversified Equity Fund has reshuffled its portfolio by adding newly adding Lupin, Hero Motocorp, Tata Consumer Products, ICICI Prudential Life Insurance and Cipla to the portfolio and removed Max Financial Services, Power Grid and Thermax from the portfolio. Most of these funds have heavily invested in Auto, Auto Ancilliary and Banking & Finance stocks.
NAV of only 13 out of 37 funds have fallen by less than 10%. BOI AXA Tax Advantage Fund and Shriram Long Term Equity Fund have had a better luck as the NAV fell by less than 5%. BOI AXA Tax Advantage Fund survived that bear market because of the great portfolio the fund manager, Aakash Manghani, has done a great job. For every HDFC Bank, there is an Abbot India to cushion the fall. The portfolio had stocks of companies like Reliance Industries, Divi's Lab, Bharti Airtel and Avenue Supermart. BOI AXA Tax Advantage Fund is among the select few funds which were able to beat the benchmark in the last one year. Shriram Long Term Equity Fund does not have large AUM, but the portfolio has IT and Pharma stocks which have cushioned the fall.