Investment Shastra
tax saving mutual funds 2022

Tax saving coincides with an equity Sale: The Best time to buy an ELSS fund is now!

Usually, we ask investors to avoid waiting right up to the end of March to make your tax saving investments. As more often than not, a decision made in haste may not be the most appropriate one for you. However, this year you are one lucky investor if you have waited until now to make your ELSS investments.

At the time of writing this blog, markets are almost 15% down from their peak. That means along with tax saving you get an added benefit of investing at cheap prices, thereby improving your returns.

In fact, if the markets continue to remain subdued in the next few months, we would advise our readers to go ahead and make their tax saving investment for the next year too. After all, we wouldn’t want you to miss out on this bargain!

We have already determined that ELSS funds are one of the best tax saving options available to investors. If you want to find out why read this blog.

And if you want to know how to choose a good ELSS fund yourself, read, ‘How do you select the right Equity Mutual Fund to invest in?

However, if you want a ready list of funds to invest in right now, read on.

What are the Best ELSS Funds for 2022?

Following is a list of ten shortlisted ELSS funds for 2022 based on the parameters listed in our blog (sorted on the basis of upside potential)

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1. HDFC Tax Saver:

The fund’s portfolio is extremely well-positioned to benefit from the macro factors in the next 2-3 years. The fund mainly invests in high-quality companies that can boast of high growth, strong balance sheets, quality management, and good corporate governance. The fund manager places a higher emphasis on valuation to ensure a margin of safety.

Check, Fund Review

2. Quantum Tax Saving Fund:

Much like the flagship fund of the fund house, Quantum Tax Saving Fund too follows a value style of investing. The fund’s portfolio is poised to benefit from the ongoing shift from growth to value style of investing.

Check, Fund Review

3. Franklin India Tax Shield:

Lakmishanth Reddy has been managing the fund since May 2016. The fund predominantly invests in large cap stocks (70% of portfolio). Though the fund manager is style agnostic, the fund portrays a valuation bias.

Check, Fund Review

4. SBI Long Term Equity Fund:

Though the fund was launched in 1993, fund manager Dinesh Balachandran has been managing it since Sep 2016. The fund’s investment style has changed from growth to value since then. The fund manager chooses to invest in stocks where there is high valuation comfort, though the near-term visibility may not be great.

Check, Fund Review

5. Kotak Tax Saver Fund:

The fund follows growth at a reasonable price investment philosophy. The fund manager Harsha Upadhyaya is positioning the fund to gain from India’s economic revival, with an investment focus on companies that are prime rerating candidates. The fund continues to maintain a large cap bias with almost 58% of the portfolio invested in large cap stocks.

Check, Fund Review

6. DSP Tax Saver Fund:

According to Fund Manager Rohit Singhania, the fund does not allow any specific investment approach, enabling the fund manager to invest in any opportunity the market may provide. Consequently, the fund floats a higher churn ratio than most of its peers.

Investors should also take into account the frequent changes in the equity investment team. The team has seen the exit of key managers including S. NAganath (CIO), Anup Mahaeshwari (CIO), Harish Jhaveri, and more recently, Gopal Agrawal. These frequent changes put forth a legitimate question on the team’s stability.

Check, Fund Review

7. Nippon India Tax Saver (ELSS Fund):

The fund follows a growth at a reasonable price approach with support from an internal quant-based framework. The portfolio attempts to have a large cap orientation with tactical allocations to mid-caps based on a higher price value gap without compromising on quality focus. It has a long term bias, however, portfolio churn may be higher with changes guided by Quant Model at regular intervals.

Check, Fund Review

8. Invesco India Tax Plan:

Though the fund house is style agnostic, Invesco India Tax Plan has a visible growth bias in its portfolio. The fund is concentrated in large caps stocks with almost 65% of the portfolio invested in this space.

Check, Fund Review

9. ICICI Prudential Long Term Equity Fund:

The fund manager invests in stocks with a focus on the fundamentals of the business, the industry structure, the quality of management, sensitivity to economic factors, the financial strength of the company, and the key earnings drivers. The portfolio is a blend of large, mid, and small cap stocks.

Check, Fund Review

10. IDFC Tax Advantage (ELSS) Fund:

The fund also follows a growth at a reasonable price investing strategy. The fund manager pursues an aggressive investment with almost 48% of the portfolio invested into small/mid-caps stocks and thus is suited for investors with a high-risk appetite.

Check, Fund Review

ELSS Mutual Funds 2022

MoneyWorks4me Top Pick:

HDFC Tax Saver Fund: The current fund portfolio is nicely positioned to benefit from India’s economic recovery cycle. We also expect value strategy to outperform growth over the next few years. We thus prefer the fund over peers currently.

However, investment in any of the above funds with an investment horizon of 7-10 years should yield good returns.

We have already determined that ELSS funds are one of the best tax saving options available to investors. If you want to find out why read this blog.

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Aliya Sayyed

Manager - Equity Research; Total 10 years works experience ranging from equity analysis, portfolio management, and financial planning. MBA in Finance. Passionate about equity research. Likes reading Finance, business, and classic fiction. Spends free time with friends and family.

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