I have an SIP in 2 ELSS schemes: HDFC Tax Saver and BSL Tax Relief. The latter has not performed at all over the past 6 months. Should I stay invested or switch to another ELSS? Please suggest 2 good ELSS schemes for a long-term SIP.
- Mohammed Saalim
You state that the fund has not performed well over the past six months. You should not be overly concerned about such short-term movements. Performance of a scheme can be hit due to cash calls, exposure to a certain market cap, stock picks which did not work out or sector exposures which have not played out. Good funds, like good players, have their bad patches. HDFC Taxsaver, a 4-star rated fund in the same category, hit a lean patch in 2007 and found itself at the bottom of the ladder in terms of returns. It subsequently bounced back to a top-quartile performance. One must always look at how the fund performs over longer periods of time.
However, coming back to BSL Tax Relief, it has always been a volatile player. It has fluctuated from being a bottom quartile performer (2005, 2008) to a top quartile performer (2006, 2007, 2009). Frankly, there are other better options in the category. But do note, once you invest in an equity linked savings scheme (ELSS), you have to hold on to your investment for the mandatory three years.
This article was originally published on August 19, 2010.
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