Investments in Tax saving Mutual Funds – Does it make sense?

With December on the calendar it is time to plan out the finances and look for tax saving instruments. There are many products available right from low risk PF to high risk Equity Linked Savings Schemes (ELSS) – Equity Mutual Fund.

As we explained earlier when it comes to tax saving majority would like to opt for low risk products but on the other hand they will be comfortable risking their disposable income by directly betting on stocks based on friend’s recommendation.

We would suggest that one should take a step forward and allocate the available funds across the assets. It is wise to asset allocate across Stocks, ELSS / Mutual Funds, Debt products based on risk appetite. Now what is ideal portion to allocate funds across this and more so which schemes should be selected for investments in Tax saving Mutual Funds?

There is no shortcut to financial success but one should rely on time proven methods to understand the funds that can probably outperform in future. We, at WavesMF, use in depth research model based on Elliott wave to understand the funds that have high potential to perform well in the future rather than just looking at the past.

Below is a gist of Tax saving scheme – Birla Sun Life Tax Relief 96

Birla Sun Life Tax Relief 96 is ELSS fund where investor is eligible for tax exemptions up to 150,000 INR under section (u/s) 80C of the Indian Income Tax Act, 1961 if they stay invested for three years or more. ELSS Funds are also eligible for Long Term Capital Gains which will be treated tax free as the holding will be more than one year. The Dividend earned from ELSS funds is also treated as tax free.

The fund aims to generate returns by investing in complete equity with maximum exposure to Banking/Finance and Automotive sector. The fund has diversified its holdings into 50 stocks with major concentration into top 5 stock holdings which is shown below.
birla sunlife 201504012


Birla Sun Life Tax Relief 96 is an open ended Equity Linked Saving Scheme (ELSS) with 99.77% exposure to equity. Currently the Indian Equity markets are struggling and this fund has complete exposure to equity markets which is the reason we are witnessing downside drift in the NAV’s. Now is time to slowly accumulate as there is likelihood of positive breakout in the Equity markets which will gear up the returns from this fund along with tax saving thereby providing dual benefits.
Sector Allocation (1st December, 2015)

sector allocation 20150412

There is more to this and it is prudent not to put all eggs in one basket. At the same time over diversification will mitigate the purpose of generating alpha returns. It is therefore important to prudently allocate funds across 2 to 4 different schemes.

Want to Invest NOW for TAX saving Or to achieve Financial Goals for future? Take a step ahead and Contact US for any queries or investments. Also get access to research to learn as you invest for FREE. For more details write to us at or Call us on +91 9920922639..Contact us

Recent Posts