Equity-Linked Savings Schemes, or simply ELSS is your ticket for smart tax savings and wealth accumulation. With inflation-beating returns and lock-in as long as a mere three years, ELSS funds are top favourites among sensible investors. This blog explores which are the very best ELSS funds for the year 2025 and also why they feature in your wealth creation portfolio.
Why Choose ELSS Funds?
Here’s why ELSS funds are the ultimate tax-saving investment:
- Save Taxes: Get tax deductions of up to ₹1,50,000 under Section 80C of the Income Tax Act, 1961.
- Shortest Lock-In: With only a three-year lock-in period, ELSS beats other 80C investments like PPF or FDs.
- High Growth Potential: Invest in equities for returns that can outpace inflation.
- Start Small: Begin your investment journey with just ₹100 per month through SIP.
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Top ELSS Funds for 2025
Here are the standout ELSS funds that offer both high returns and tax benefits:
1. Quant ELSS Tax Saver Fund Direct-Growth
- 3-Year Return: 13.56%
- 5-Year Return: 30.21%
The Quant ELSS Tax Saver Fund invests in high-growth sectors with notable holdings such as Reliance Industries, JIO Financial Services, Samvardhana Motherson, Adani Power, LIC, Larsen & Toubro, Grasim Industries, and Aurobindo Pharma. This diversified portfolio makes it a strong choice for 2025.
2. Bank of India ELSS Tax Saver Direct-Growth
- 3-Year Return: 14.43%
- 5-Year Return: 23.53%
This fund balances growth and stability, with key holdings in HDFC Bank, State Bank of India, Vedanta, Coforge, Swan Energy, NTPC Green Energy, General Insurance Corporation, and ICICI Bank. It’s ideal for moderate-risk investors.
3. SBI Long Term Equity Fund Direct Plan-Growth·
- 3-Year Return: 21.33%
- 5-Year Return: 23.43%
A consistent performer, this fund holds stocks like HDFC Bank, Reliance Industries, ICICI Bank, Bharti Airtel, Torrent Power, Mahindra & Mahindra, Tata Steel, ITC, and Tech Mahindra. Its diversified allocation ensures balanced growth.
4. Parag Parikh ELSS Tax Saver Fund Direct-Growth
- 3-Year Return: 16.33%
- 5-Year Return: 23.23%
This fund emphasizes long-term growth with a mix of large and mid-cap equities. Key holdings include Bajaj Holdings, HDFC Bank, Power Grid Corporation, Coal India, ITC, ICICI Bank, Maharashtra Scooters, HCL Technologies, Infosys, and Maruti Suzuki. Its thoughtful strategy ensures steady returns.
5. Motilal Oswal ELSS Tax Saver Fund Direct-Growth
- 3-Year Return: 22.21%
- 5-Year Return: 22.61%
With a disciplined approach, this fund’s portfolio includes Bajaj Holdings, HDFC Bank, Power Grid Corporation, Coal India, ITC, ICICI Bank, Maharashtra Scooters, HCL Technologies, Infosys, and Maruti Suzuki. It’s a strong contender for long-term growth and tax savings. ELSS mutual fund schemes invest in a range of stocks across sectors and market capitalizations, ensuring diversification and risk management. Funds like Quant and Motilal Oswal ELSS strategically include industry leaders such as HDFC Bank, Reliance Industries, Infosys, and ITC while maintaining exposure to mid-cap and small-cap equities. This diversified approach ensures balanced growth and reliable returns.
How to Pick the Right ELSS Fund?
Choosing the perfect ELSS fund doesn’t have to be overwhelming. Keep these tips in mind:
- Historical Performance: Look at 3 and 5 year returns for consistency.
- Experienced Managers: Opt for funds managed by seasoned professionals.
- Expense Ratio: Lower expenses mean higher take-home returns.
- Risk Appetite: Align the scheme fund strategy with your risk tolerance.
- Investment Horizon: Aim for a horizon of at least 5 years to smooth market volatility.
Start Your ELSS Journey Today!
You enjoy the best of both worlds: tax savings and long-term wealth creation with ELSS funds. The above-mentioned funds are some of the best in 2025, offering solid returns and diversified portfolios. Whether you are a first-time investor or a seasoned one, ELSS helps you achieve your financial goals. Take the first step today and secure your future!
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