Category Review • Mutual Fund Insight - Mar 2025

Shining despite regime shifts

By outperforming their benchmark for two straight years, these funds have proved their edge in tax-saving and wealth creation

By outperforming their benchmark for two straight years, these funds have proved their edge in tax-saving and wealth creation

ELSS (equity-linked savings scheme) remains one of the few tax-saving options under the old tax regime that offers significant equity exposure - serving the dual purpose of tax efficiency and long-term wealth creation. Even as Section 80C faces an uncertain future, ELSS continues to be a reliable choice for investors sticking with the old regime. These funds operate like flexi-cap funds but come with a mandatory three-year lock-in period, allowing flexibility in sector and market-cap allocations. On average, ELSS funds currently hold 72 per cent of their net assets in large caps, 22 per cent in mid caps and the remaining 6 per cent in small caps. Key highlights & trends Performance remains strong: For the second year in a row, three out of four ELSS funds outperformed their benchmark. Half of these funds delivered an impressive alpha of 5 per cent over the BSE 500, reflecting exceptional stock-picking and portfolio management skills. Even during the

This article was originally published on February 15, 2025.


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