Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Disappointing year for tax saving funds - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Feb 27, 2001

    Disappointing year for tax saving funds

    Investors who had plumbed for tax-saving funds last year have learnt an important lesson. There is a risk associated with such investments and the returns are not necessarily rewarding.

    Tax Saving Schemes NAV (Rs) 1 week 1 month 1 year Inception
    Magnum Taxgain 20.68 -8.30% -13.80% -63.90% 12.20%
    Tata Tax Savings 11.55 -4.30% -4.60% -58.90% 26.50%
    Birla Equity Plan 14.45 -4.70% -8.40% -56.40% 25.00%
    Pru ICICI Tax (Gr) 12.07 -6.60% -7.90% -52.60% 2.80%
    Alliance Cap. Tax 1996 58.63 -6.60% -12.50% -40.70% 56.10%
    Canpep 1993 18.72 -0.90% -4.80% -37.80% 13.40%
    Sundaram Tax Saver 9.29 -4.00% -3.60% -31.80% -5.70%
    K P Tax Shield (Gr) 25.77 -5.00% -6.20% -29.20% 68.70%
    UTI Equity Tax Savings 12.07 -3.90% -5.80% -20.70% 8.20%

    4 out of the 9 equity-linked tax saving schemes (ELSS) have slumped by over 50%, the rest have done little better.

    ELSS schemes have most of their net assets in equities. For an investor assessing his tax-saving options (under Section 88), ELSS is far more risky than say investment in a public provident fund (PPF), National Saving Scheme, or infrastructure bonds. ELSS has a high-risk, high-return investment profile. However, while risk has been sufficiently high over the last 12 months, returns have been most disappointing. A lot of investors have shied away from ELSS products this year mainly because of their dismal performance in the recent past.

    One piece of information that investors need to look is the fund performance since inception. In our sample, all but one ELSS is in the positive since inception (all returns over 12 months are annualised).

    ELSS schemes are targeted at the younger set of investors those who still have a large portion of their lives ahead of them and can afford to take on some risk for that extra return. For those who have retired or are nearing retirement, ELSS must be snubbed in favour of safer investments like PPF, NSC or bonds. Take a look at our Tax Corner for more tax-saving options.



    Equitymaster requests your view! Post a comment on "Disappointing year for tax saving funds ". Click here!


    More Views on News

    The Right Financial Advisor Is Around the Corner (Outside View)

    Mar 10, 2016

    An opportunity to find an impeccably trustworthy and competent financial guardian is in the offing.

    Why financial planning should be dull and boring (Mutual Fund Corner)

    Feb 29, 2016

    Most financial planners come out as whiz kids who throw around financial jargon. But financial planning can be actually easy, provided one follows a disciplined approach.

    What Are E-Wallets And How To Use Them (Mutual Fund Corner)

    Feb 12, 2016

    PersonalFN highlights the benefits of parking a portion of your expenses in e-wallets and using them efficiently.

    Is Consumption Boom Over In India? (Mutual Fund Corner)

    Feb 2, 2016

    Mutual funds take a bearish call on the FMCG sector. The sector has started playing out due to a combination of slower growth and expensive valuations.

    How to Find a Saint Amongst Sinners? (Mutual Fund Corner)

    Feb 1, 2016

    Ethical practices help build long lasting relationships, and healthy long-term business relationships are often mutually rewarding. But PersonalFN is of the view that the financial services industry in India seems to have forgotten this.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms