Tax Savings Alert: Best 5 ELSS Mutual Funds to Invest Before March 31, 2025

A mutual fund is an investment vehicle that pools money from multiple investors to buy securities. Investment in mutual funds is an effective way to diversify your investment portfolio and save for the long term.

What is ELSS Mutual Fund?

Equity Linked Savings Scheme (ELSS) are a kind of tax-saving mutual fund that initially invests in equities, which gives potential for high returns and tax benefits under Section 80C of the Income Tax Act with a lock-in period of 3 years.

• SBI Long Term Equity Fund, Regular Plan
• Motilal Oswal ELSS Tax Saver Fund, Regular Plan
• HDFC ELSS Tax Saver Fund
• DSP ELSS Tax Saver Fund
• Parag Parikh ELSS Tax Saver Fund, Regular Plan

Fund Details

SBI Long Term Equity Fund

Regular Plan of this fund is a highly-rated mutual fund with a 5-star rating from Value Research. As of March 2025, it manages net assets worth Rs. 25,723.50 crore. The fund’s recent performance includes returns of -6.96% over 3 months, -10.30% over 6 months, and 11.49% over 1 year. Long-term returns are more robust, with 22.86% over 3 years and 31.19% over 5 years. The fund maintains an expense ratio of 1.60%.

Motilal Oswal ELSS Tax Saver Fund

This fund has a value research rating of 5 stars.  As of March 2025, it manages a total investment of Rs 3,405.01 crore. The current performance of the fund consists of returns of -20.49% in the past 3 months, -17.37% in the previous 6 months, and 16.53% over a year. The long-term returns of the funds are more effective, with 21.18% in the past 3 years and around 26.74% returns in the previous 5 years. Moreover, the expense ratio of the fund is 1.87%

HDFC ELSS Tax Saver Fund

It is a well-rated tax-saving mutual fund with a 4-star rating from Value Research. It currently manages Rs. 14,671.37 crore in assets. While its short-term performance has seen a dip (-5.02% in 3 months and -8.72% in 6 months), its 1-year return stands at 12.20%, and the 3-year and 5-year returns are impressive at 20.47% and 30.10%, respectively. The fund comes with an expense ratio of 1.67%, which impacts overall returns.

DSP ELSS Tax Saver Fund

This fund holds a 4-star rating from Value Research and manages assets worth Rs. 14,981.09 crore. While the fund has faced some short-term setbacks (-6.65% in 3 months and -10.12% in 6 months), its 1-year return stands strong at 16.79%. Over the long run, it has delivered 17.11% returns in 3 years and 28.30% in 5 years. The expense ratio is 1.65%, which slightly impacts profitability.

Parag Parikh ELSS Tax Saver Fund

This fund’s regular plan holds a 5-star rating from Value Research and manages Rs. 4,477.32 crore in assets. While short-term returns have been negative (-4.24% over 3 months and -6.19% over 6 months), the fund has delivered 13.00% in 1 year, with 3-year and 5-year returns at 16.69% and 28.20%, respectively. It comes with an expense ratio of 1.73%, which affects overall returns.

Conclusion

Investing in ELSS funds requires careful evaluation. Analyse the fund’s past performance, expense ratio, and the expertise of the fund manager, as they play a key role in portfolio allocation. If you’re a first-time investor, consulting a financial advisor can help you choose the right fund based on your tax-saving needs, financial goals, and risk appetite.