Equity-Linked Savings Schemes (ELSS) have become a popular choice among investors looking to save on taxes under Section 80C of the Income Tax Act while also seeking long-term capital appreciation.
With a statutory lock-in period of 3 years, these funds offer an excellent opportunity for wealth creation over the long term.
In this blog, we will compare two well-known ELSS options: SBI Long Term Equity Fund and Mirae Asset ELSS Tax Saver Fund, to help you decide which one aligns better with your investment goals.
What Are ELSS Funds?
ELSS funds are equity mutual funds that offer tax benefits under Section 80C of the Income Tax Act. Investors can claim a deduction of up to ₹1.5 lakh annually by investing in these funds. In return, these schemes have a mandatory lock-in period of 3 years, which means investors cannot redeem their investments before this period ends.
ELSS Mutual Funds primarily invest in equity and equity-related instruments, making them ideal for investors seeking long-term capital growth.
While these funds come with market risks, they also offer the potential for higher returns compared to traditional tax-saving instruments like Fixed Deposits (FDs) or Public Provident Funds (PPFs).
Investment Objective of Schemes
Both SBI Long Term Equity Fund and Mirae Asset ELSS Tax Saver Fund aim to provide long-term capital appreciation while offering tax-saving benefits. Let’s take a closer look at the investment objectives of each scheme:
- SBI Long Term Equity Fund: The objective of the fund is to deliver long-term capital appreciation by investing predominantly in equity shares. The scheme also aims to distribute income periodically depending on the distributable surplus.
- Mirae Asset ELSS Tax Saver Fund: The scheme aims to generate long-term capital appreciation from a diversified portfolio of equity and equity-related instruments.
Comparison of Key Fund Details
Here’s a comparison of the key details of the SBI Long Term Equity Fund and Mirae Asset ELSS Tax Saver Fund:
| Attributes | SBI Long Term Equity Fund | Mirae Asset ELSS Tax Saver Fund |
| Fund House | SBI Mutual Fund | Mirae Asset Mutual Fund |
| Inception Date | March 31, 1993 | December 28, 2015 |
| Risk Profile | Very High | Very High |
| Fund Manager | Mr Dinesh Balachandran | Mr Neelesh Surana |
| AUM (as of Sep 2024) | ₹28,744.13 Cr | ₹ 26417.64 Cr |
| Benchmark Index | S&P BSE 500 TRI | Nifty 500 (TRI) |
| Exit Load | Nil | Nil |
| Minimum Lumpsum Amount | ₹500 | ₹500 |
| Minimum SIP Amount | ₹500 | ₹500 |
Portfolio Allocation of Schemes
Both schemes allocate a significant portion of their portfolios to equity and equity-related instruments. Here’s a comparison of their asset allocation strategies:
| Type of Instruments | SBI Long Term Equity Fund | Mirae Asset ELSS Tax Saver Fund |
| Equity & Equity-related Instruments | 80-100% | 80-100% |
| Debt & Money Market Instruments | 0-20% | 0-20% |
Comparison of Risk and Returns
ELSS funds carry a high level of risk due to their exposure to equity markets. However, the potential for higher returns compensates for this risk, especially over a longer investment horizon.
Let’s compare the performance of these funds against their respective benchmarks:
| Returns | SBI Long Term Equity Fund | BSE 500 TRI |
| 1 Year | 54.10% | 40.85% |
| 3 Years | 27.37% | 18.39% |
| 5 Years | 27.04% | 22.38% |
| Returns | Mirae Asset ELSS Tax Saver Fund | Nifty 500 TRI |
| 1 Year | 32.10% | 35.17% |
| 3 Years | 16.13% | 18.10% |
| 5 Years | 18.89% | 17.85% |
Both funds have delivered solid returns over different time periods. SBI Long Term Equity Fund has been around for much longer and has a well-established track record, while Mirae Asset ELSS Tax Saver Fund has shown impressive performance since its inception.
Asset Management Company
Here’s a brief overview of Asset Management Companies of the funds.
SBI Mutual Fund
SBI Mutual Fund (SBIMF) is a prominent asset management company in India, established in partnership with the State Bank of India and French firm Amundi.
Founded on June 29, 1987, it has a strong track record of helping investors grow their wealth, managing assets totaling ₹1,039,785.49 crore as of June 30, 2024.
SBI Mutual Fund gained recognition for launching India’s first Contra and ESG funds and offers a diverse range of 146 schemes.
Notable among them are the SBI PSU Fund, which has led in returns within the PSU Theme Fund category over the past three years, and the SBI Small Cap Fund, known for its resilience against market volatility.
Mirae Asset Mutual Fund
Mirae Asset Mutual Fund was founded during the Asian financial crisis in 1997, initially focusing on the Korean market before expanding internationally, with its first office in Hong Kong in 2003.
The company became a pioneer in the industry by offering Mutual Funds to retail investors in 1998 and launched the Mirae Asset Retirement Pension Fund in 2005.
Entering the Indian market as a foreign institutional investor in 2004, Mirae began local operations in 2008. As of June 30, 2024, Mirae Mutual Funds boasts a rapidly growing portfolio with total Assets Under Management (AUM) of ₹184,361.08 crore.
Notable schemes include the Mirae Asset Midcap Fund, which has delivered the highest returns among mid-cap funds over the past five years, and the Mirae Asset Large & Midcap Fund, recognized for its strong performance over the last decade.
Which fund is Right For You?
Both the SBI Long Term Equity Fund and Mirae Asset ELSS Tax Saver Fund are solid choices for tax-saving investments. However, the best fund for you depends on your investment style and risk appetite:
- SBI Long Term Equity Fund may be a better fit for:
- Investors looking for a long-established, large fund house with a proven track record.
- Those seeking stability in their portfolio over the long term.
- Mirae Asset ELSS Tax Saver Fund may be more suitable for:
- Investors who are comfortable with a relatively newer fund but with a strong recent performance.
- Those looking for higher returns and are willing to take a slightly higher degree of risk.
Both funds offer tax-saving benefits and have the potential to deliver robust returns over the long term. Make sure to assess your risk appetite and investment goals before choosing the right ELSS fund for you.
Conclusion
ELSS funds like SBI Long Term Equity Fund and Mirae Asset ELSS Tax Saver Fund provide investors with an excellent opportunity for wealth creation while also saving on taxes. Whether you prefer the security of a long-established fund or are willing to take a bit more risk for potentially higher returns, both options have their own merits.
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