Top 5 Tax Saving Mutual Funds for 2025

Tax saving is an integral part of our financial planning and wealth creation journey. A rupee saved from tax is a rupee earned.

A variety of tax-saving investment avenues exist. Among them, are Equity linked Savings Scheme or ELSS, also known as tax-saving mutual fund, is a popular choice.

What Are ELSS or Tax Saving Mutual Funds?

They are mandated to invest a minimum of 80% of their total assets in equity and equity-related instruments as per the Equity-Linked Savings Scheme 2005, as notified by the Ministry of Finance.

Further, these funds come with a mandatory lock-in period of 3 years and offer tax benefits.

An ELSS or tax saving mutual fund invests your money flexibly across market capitalisation and sectors.

These funds can follow a growth, value or a combination of styles while investing. This potentially allow you to benefit from diversification and fund management styles.

Some of the popular tax saving mutual funds in India are as under:

ELSS With High AUM

Scheme Name	AUM (Rs Billion)
Axis ELSS Tax Saver Fund	362.58
SBI ELSS Tax Saver Fund	306.16
DSP ELSS Tax Saver Fund	174.28
HDFC ELSS Tax saver	169.08
Aditya Birla SL ELSS Tax Saver Fund	158.7
Nippon India ELSS Tax Saver Fund	156.23
ICICI Pru ELSS Tax Saver Fund	146.61
Quant ELSS Tax Saver Fund	119.23
Canara Rob ELSS Tax Saver	91.03
Bandhan ELSS Tax Saver Fund	71.51

Source: ACE MF

It is not always true that an ELSS with high AUM is better for you. While it may signify the fund's popularity, it does not mean it shall deliver appealing returns for you.

You see, not all ELSS are worth your hard-earned money. Hence, enough care needs to be taken when selecting the right fund.

In this editorial we take you through the potentially top tax saving mutual funds or ELSS in India on 3-year historical returns. We have considered 3 years because that's when the lock-in ends.

#1 Motilal Oswal ELSS Tax Saver Fund

Launched in January 2015 as Motilal Oswal Long Term Equity Fund, it changed its name in October 2023 to align with the category and to bring uniformity across schemes.

Since its inception, the fund's assets under management(AUM) have increased remarkably, and today they are over Rs 45 billion (bn).

It emphasises on identifying high quality/high & sustainable growth companies by following a bottom-up approach.

Quality, Growth, Longevity and Price (QGLP) are the key parameters used for evaluation. It looks for businesses should have strong earnings growth prospects and be available at reasonable valuations.

Motilal Oswal ELSS Tax Saver Fund prefers holding a compact portfolio. Currently, it has 34 stocks, of which 40.3% are midcaps, 32.3% smallcaps, and 26.6% largecaps, as per June 2025 portfolio.

The top 10 stocks comprise 41.8% of the fund's portfolio and include names such as Eternal (5.3%), MCX (4.9%), and Trent (4.7%).

The fund has exposure to 13 sectors at present. Among them the top 3 sectors are capital goods (31.8%), finance (19.6%), and retail (10.0%).

With a mid and smallcap biased portfolio, this fund has delivered a compounded annualised rolling returns of 26.4% and 26.2% over 3 years and 5 years, respectively.

However, the fund has exposed its investors to high risk as denoted by the standard deviation (SD) of 19.07. This is higher than the category peers and even the benchmark, Nifty 500 - TRI.

Thus, while the fund's sharpe ratio (0.39) is better than the category average and Nifty 500 - TRI, the sortino ratio (0.67) - a measure to determine a fund's ability to contain the downside risk - has lagged behind the category and the benchmark index.

This also indicates that the volatility in this fund is high.

#2 SBI ELSS Tax Saver Fund

This scheme was launched in March 1993 as SBI Long Term Equity Fund has track record of over 32 years. With effect from 30 June 2025, it is renamed as SBI ELSS Tax Saver Fund.

The AUM of the fund has grown over the years and is over 306 bn as per June 2025 portfolio. Like its peers it invests across market caps and sectors.

However, it adopts a balanced approach emphasising investing in well-established largecap companies, at the same time does not stay away from investing in midcaps and smallcaps.

It follows a value-conscious investment approach, focusing on securities with a high margin of safety. It takes both, bottom-up and a top-down view to pick stocks.

It usually holds around 60-65 stocks in its portfolio. Currently, it owns 67 stocks, of which 61.1% are in largecaps, 21.6% in midcaps, and 11.2% in smallcaps.

The top 10 stocks comprise 37.9% of the fund's portfolio and include heavyweights such as HDFC Bank (9.3%), Reliance Industries (5.5%), and ICICI Bank (3.5%), among others.

The fund has exposure to diverse range of sectors. Among them, the top 3 sector are banks (22.1%), auto & ancillaries (10.8%) and IT (9.8%). These comprise 42.7% of the fund's overall portfolio.

By holding a largecap biased portfolio and following a 'buy-and-hold' strategy, it has delivered an appealing CAGR of 26.3% and 27.4%, over a 3 year and 5 years. It has outperformed its category peers and Nifty 500- TRI by a noticeable margin.

On a risk-adjusted basis as well, it has performed impressively. The sharpe and sortino ratio of the fund are decent 0.50 and 1.19 respectively.

Also, the risk taken by the fund (SD of 12.92) is less than category average and the Nifty 500 - TRI.

The fund has shown a consistent performance in the last 5-7 years.

#3 HDFC ELSS Tax saver

This scheme launched in March 1996 as HDFC TaxSaver Fund is also one of the pioneers in ELSS category. In October 2023, it was renamed as HDFC ELSS Tax saver.

Over the years it has built a reputation with its disciplined and consistent investment approach. Its AUM is over 169 bn as per June 2025 portfolio.

It focuses on high-conviction investments, blending growth and value strategies to identify strong stocks at attractive valuations.

In other words, it focuses on companies having strong management with the ability to capitalise on opportunities while managing risks. It also considers the track record of corporate governance, ESG sensitivity, and transparency.

This fund avoids short-term tactical bets and prefers to hold stocks with a long-term view, even if it leads to occasional underperformance.

In times when value-investing has strategy has been out of favour, the fund has lagged. However, from 2022 onwards with market conditions favouring value style and high conviction bets, it has delivered an impressive performance in the current bull market.

It usually holds around 40 to 50 stocks spread across market caps and sectors. Currently it has 53 stocks, of which largecaps are 77.9%, smallcaps 10.6%, and midcaps 3.5%.

The top 10 stocks are 56.0% of the portfolio and include names such as HDFC Bank (9.8%), ICICI Bank (9.4%), Axis Bank (8.5%), etc.

In terms of sectors, the portfolio is mainly skewed to banks (35.7%), followed by auto & ancillaries (14.1%) and healthcare (8.6%), among others. The top 3 sectors 58.5% of the portfolio.

With such a strategy, in the last 3 years and 5 years, the fund has delivered a CAGR of 23.9% and 24.6%, respectively.

The returns have come with by keeping the risk low (SD of 11.96) than the category average and the Nifty 500 - TRI. The fund has also fared well on the risk-adjusted basis as indicated by sharpe and sortino ratio of 0.47 and 1.14, respectively.

#4 ITI ELSS Tax Saver Fund

This scheme was launched over five years back in October 2019. It was earlier known as ITI Long Term Equity Fund. In October 2023 it was renamed ITI ELSS Tax Saver Fund. Its AUM is over Rs 4 bn as of June 2025.

The fund considers expected earnings growth, market and business cycles as part of its research process. It identifies companies based on the industry scenario, track record of the company, and its potential future growth.

So, it follows a combination of top-down and bottom-up approaches to stock picking.

The investment philosophy is focused on margin of safety (S), quality of the business (Q), and low leverage (L). The fund follows a 'growth at reasonable price' (GARP) strategy and not growth at any price.

It usually holds 60 to 70 stocks in its portfolio. Currently it has 73 stocks, of which largecaps are 39.5%, midcaps 9.9%, and smallcap 47.9%. In the last one year, the fund has increased its allocation to smallcaps. The top 10 stock are 32.6% of its latest portfolio.

The fund has a diverse sector exposure, but its top 3 sectors are banking & finance (29.8%), realty (9.6%), and IT (7.2%), which comprise 46.6% of the portfolio.

With this strategy, in the last 3 years and 5 years, the fund has delivered a CAGR of 21.9% and 22.1%, respectively.

However, with a smallcap oriented portfolio the risk exposure of the fund is also high (SD of 15.22) compared to the category average and the Nifty 500 - TRI.

Against this, the risk-adjusted returns are almost in line with category average and the benchmark index.

#5 JM ELSS Tax Saver Fund

This scheme was launched in March 2008 as JM Tax Gain Fund. In November 2023, it was renamed as JM ELSS Tax Saver Fund.

Since August 2020, the scheme has seen a sharp increase in its AUM, and today it is over Rs 2 bn.

It prefers secular growth stories which have compounding potential along with scalable business models and sound management.

It considers trends in industries and companies, including management capabilities, global competitiveness, earning power, growth/payout features and other relevant investment parameters.

Along with that, the outlook of the economy, exposure to various industries and geographical regions, and the intrinsic worth of specific opportunities are also evaluated.

It follows both a top-down and bottom-up approach along with a growth style of investing.

The fund usually holds around 50-60 stocks. Currently it has 48, of which 47.3% are largecaps, 16.8% midcap, and 32.9% smallcaps, as per its June 2025 portfolio. Top 10 stock are 34.9% of the portfolio and include L&T (5.1%), ICICI Bank (4.8%), and HDFC Bank, among others.

Banking & finance (28.6%), IT (10.8%), and auto & ancillaries (8.5%) are the top three sectors, which comprise 47.9% of the portfolio.

The fund has delivered a CAGR of 21.5% and 24.8% over 3 years and 5 years, respectively.

It exposed investors to slightly higher risk (SD of 14.6) than its category average and Nifty 500 - TRI but justified it on a risk-adjusted basis by faring better.

Performance of Top ELSS or Tax Saving Funds

Scheme Name	Absolute (%)	CAGR (%)			Risk Ratio
	1 Year	3 Years	5 Years	7 Years	SD Annualised	Sharpe	Sortino
Motilal Oswal ELSS Tax Saver Fund	37.26	26.37	26.18	17.67	19.07	0.39	0.67
SBI ELSS Tax Saver Fund	29.84	26.27	27.37	17.85	12.92	0.50	1.19
HDFC ELSS Tax saver	26.62	23.90	24.60	15.22	11.96	0.48	1.14
ITI ELSS Tax Saver Fund	26.98	21.88	22.15	-	15.22	0.40	0.76
JM ELSS Tax Saver Fund	28.17	21.51	24.79	17.77	14.63	0.38	0.77
Category Average	21.72	18.26	22.45	15.28	13.41	0.36	0.75
Benchmark Indices
NIFTY 500 - TRI	19.89	16.71	21.59	14.94	13.55	0.32	0.68
NIFTY 50 - TRI	16.18	13.87	18.71	14.22	12.21	0.28	0.64

Source: ACE MF

Conclusion

Investing in ELSS or tax saving mutual funds will get you effectively two birds in one stone, i.e. tax saving and help in potentially building wealth.

If you opt for the old tax regime, the investment made in ELSS in the financial year entitles you to a deduction of up to Rs 1.5 lakh under Section 80C of the Income Tax Act.

ELSS is for risk-taking investors who do not mind market-linked returns and seeking capital appreciation over a time horizon of 3 years or more.

Happy investing.

#Table1 Note: The list of funds cited here is not exhaustive.
The securities quoted are for illustration only and are not recommendatory.
AUM data as of 30 June 2025

#Table2 Note: Data as of 9 July 2025
Rolling period returns are calculated using the Direct Plan-Growth option. Returns over 1 year are compounded annualised.
Please note that returns here are historical returns.
* The top funds here in the table are based on past returns on 3-year returns, which is the lock-in period for ELSS. The list of schemes is not exhaustive.
Past performance is not an indicator of future returns.
The securities quoted are for illustration only and are not recommendatory.
Speak to your investment advisor for further assistance before investing.
Mutual Fund investments are subject to market risks. Read all scheme-related documents carefully.

Disclaimer: This write-up is for information purposes and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme-related documents carefully. Registration granted by SEBI, Membership of BASL and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.