The Best ELSS Tax Saving Fund To Invest In 2021

It is that time of the year when I share the process to find the best tax saving ELSS fund one should invest in 2021 and look back on the past best tax saving funds to learn something new.

As every year, let me kick off the 2021 series with the best ELSS tax saving fund.

The Top ELSS Funds for 2021

We start with ValueResearchOnline’s 4 and 5 star rated direct ELSS funds. Arrange them in decreasing order of the expense. Now we have the ELSS tax saving funds as follows:

We are moving from the top funds to the best funds based on the expense ratio alone.

Best Tax Saving ELSS funds for 2021

For me, the best fund is the one that has the least expense ratio. If a fund can keep the expense ratio under check, it will get good returns in the long-term.

Mirae Asset Tax Saver

Mirae Asset Tax Saver has the lowest expense ratio as compared to its peers by a considerable margin.

So it is my choice of a fund in 2019, 2020, and remains the fund for 2021.

The fund has given a whopping 23% as a 1-year return, which also speaks for itself.

The expense ratio is a crucial factor in choosing the fund.

Quant Tax / Axis Long Term Equity

After Mirae Asset Tax Saver, the second-lowest expense ratio is for the fund Quant Tax.

However, the asset under management for this fund is only 23 Crore, which is very low.

Still, I think that because of such low assets under management, having a low expense ratio can mean the fund can move in and out of stock very quickly.

One can consider Quant Tax if one is willing to risk being in a fund with a very low asset under management.

However, if you want to play safe, the next best ELSS fund for 2021 must be Axis Long Term Equity.

The choice is based on moving to the next level of expense ratio till we have a fair amount of assets under management and has performed well in the volatility of 2020.

How has The Best ELSS Tax Saving Funds for 2020 Performed?

In 2020, my choices of funds were:

• Mirae Asset Tax Saver Fund – It is one of the better performing funds in the ELSS tax saving category and remains the best fund for the year in 2021. Over 23% return in 2020 is remarkable.
• Tata India Tax Savings – The fund didn’t perform as well as one would have expected. Subpar return of only ~12% in the past year.

Mirae Asset Tax Saver Fund is the best fund of 2019 and 2020 and is now the best ELSS fund of 2021. It is performing well, and I expect the fund to be doing good in the future.

Final Thoughts

This review is neither a sponsored one nor an endorsement that you should invest only in the abovementioned funds.

I have shared the complete process I am using to find the best performing ELSS tax saving fund for 2021. Feel free to apply your choice of criteria that gives you comfort while investing. Like the use of 3 or 5 year returns to judge a better performing fund.

Make sure to invest in direct funds. And finally, don’t invest in a fund because someone has recommended it to you, including me. Always apply your investment logic to each of your investments.