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Choosing an ELSS Fund

Deepak Ghavri is confused over a couple of ELSS funds & asks us which he should opt for

I want to invest Rs 30,000 in an ELSS to obtain maximum tax benefits in terms of deduction. I’m confused between Magnum Taxgain and Sundaram BNP Paribas Taxsaver or any other new upcoming fund that has the potential to show a good performance. Please advice.
-Deepak Ghavri

It is better to stay away from new funds as they do not have a performance history. Now coming to your confusion between Magnum Taxgain and Sundaram BNP Paribas Taxsaver, let’s take a detailed look at both of them.

Both funds have track records. If we compare their annualized five-year trailing returns as of February 28, 2009, Magnum scores over Sundaram with 25 per cent returns while the latter has delivered 22 per cent. But if we come to recent performances, Magnum has been shedding more than Sundaram in the one year, two year and three year trailing returns. In the market meltdown of 2008 too, Magnum has shed 55 per cent while Sundaram has shed a lesser 48 per cent.

You can opt for Sundaram Taxsaver as it has come out to be a more stable offering while Magnum Taxgain’s performance has been sliding down in the recent past.



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