Best Tax Saving Funds to Invest in 2020
Every investor makes an investment based upon two key psychologies, one is about making money and the other is about capital protection or tax saving. There are numerous ways one can invest such as stocks, bonds, gold, mutual funds, government securities and real estate. But for a specific purpose, such as tax savings, there are certain schemes available which provide the dual benefit of capital appreciation and tax saving. The most common options available for the investor are fixed deposits, PPF, National Savings Certificate (NSC). But these options, benefits are quite limited as compared to tax saving mutual funds.
Tax Saving Mutual Funds:
Tax saving mutual funds are just like any mutual fund apart from tax–saving benefits. If you are an investor, whose financial goals are good returns, moderate risk and tax saving under section 80C at the same time then tax saving mutual funds are for you. There are various benefits of investing in these funds, as it first provides diversification and then second capital protection as well as reasonable return. Let’s look at the top tax saving mutual funds to invest in 2020, according to Gulaq methodology:
- Kotak Tax Saver Scheme Direct Plan
- Axis Long Term Equity Fund Direct plan
- Mirae Asset Tax Saver Fund Direct Plan
- Canara Rob Equity Tax Saver Fund
- Tata India Tax Saving Fund
Let’s look at each of these schemes in details:
Kotak Tax Saver Scheme (G)
It is an open-ended equity–linked saving scheme, whose prime objective is to generate long term capital appreciation from a diversified portfolio of equity and equity related instruments as well as enables investors to avail the tax rebates.
The risk level associated with these funds is moderately high and suitable for an investor, who wants to invest for five-year time period.
The average returns of the fund over the five-year time period is above the benchmark. It has performed considerably well above the benchmark in terms of return. The return rate over a period of five years is 10.29%.
The current NAV of the fund is 46.161, as on 16th Dec 2019.
Axis Long Term Equity Fund (G):
- Fund Objective:
It’s an open-ended scheme with three-year lock in period. The prime aim of the scheme is to generate long term capital appreciation from investment in a diversified equity scheme.
- Risk Level:
The risk level associated with these funds is moderately high.
The average returns of the fund over the five-year time period is more than the respective benchmark. It has generated the returns close to 13.79% over the five-year time period.
The current NAV of the fund is Rs 52.2265 as per on 16th December 2019.
Mirae Asset Tax Saver Fund Direct Plan:
- Fund Objective: The prime objective of the fund is looking for additional benefits of income tax saving apart from higher return expectations.
- Risk Level: The fund risk level is the same as that of the benchmark. The risk associated with this fund is moderately high.
- Returns: The returns provided by the scheme are way ahead of their benchmark. It’s one-year return is 13.23%, which is quite high compared to the Nifty benchmark 50.
- NAV: The current Nav of this fund is 18.838 (as on the 16th December 2019)
Canara Robeco Equity Tax Saver Fund:
- Fund Objective:
Anyone who is looking to invest money for a minimum of 3 years and apart from additional benefits of income tax saving may invest in it for higher returns.
- Risk Level: The risk associated with this fund is moderately high as they mainly invest in equity and equity related instrument.
- Returns: The return provided by the scheme is close to the benchmark. The return in five-year time period is 9.26%.
- NAV: The current NAV of this fund is equal to Rs 67.6, as per December 16th, 2019.
Tata India Tax Saving Fund
- Fund Objective: The objective of the fund is to generate returns through investment in equity and equity related instruments with a lock in period of three years.
- Risk Level: The risk level associated with these funds is moderately high.
- Returns: The returns provided by the fund is more than the benchmark, especially in a time period of more than five years. The five-year return generated by the fund is 12.73%
Let’s compare each of them returns in one year, three year and five years annualized return.
|Fund||One Year return||Three year
|Kotak Tax Saver Fund
|12.78%||14.16%||13.85% (since inception)|
|Axis Long Term Equity Fund||13.79%||17.62%||13.14%|
|Mirae Asset Tax Saver Fund||15.19%||19.44%||18.98% (since inception)|
|Canara Robeco Tax Saver Fund||9.83%||14.08%||9.26%|
|Tata India Tax Saving Fund||13.90%||14.51%||12.73%|
Also Read, ELSS Funds
*Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.