Equity Linked Savings Schemes, popularly known as ELSS, are among the most trusted ways for Indian investors to combine tax savings with wealth creation. These mutual funds qualify for deductions of up to Rs 1.5 lakh under Section 80C of the Income Tax Act, which makes them an attractive choice for salaried professionals and self employed individuals looking to reduce taxable income. Unlike most other tax saving instruments, ELSS funds come with a relatively short lock in period of three years, making them more flexible compared to tax saving fixed deposits which require five years or the Public Provident Fund which requires a long commitment of fifteen years.

Beyond tax benefits, ELSS funds also provide exposure to equity markets which means higher potential for growth. Over the last three and five year periods, the ELSS category as a whole has shown impressive performance with average annualised returns of nearly sixteen percent over three years and over twenty percent over five years. These numbers place ELSS funds ahead of large cap and flexi cap categories, although they still trail behind small cap and mid cap funds.

In this article we take a closer look at three popular ELSS tax saver funds from Motilal Oswal, SBI, and HDFC. The focus is on their three year and five year performance so that investors can get a clearer picture of how these funds have rewarded those who stayed invested.

Motilal Oswal ELSS Tax Saver Fund was launched in early 2015 and has since earned a strong reputation among retail investors. With assets under management crossing four thousand crore rupees and an expense ratio of just under one percent, it has kept costs under control. Over the past three years the fund has delivered an annualised return of more than twenty five percent, far ahead of its benchmark index which managed just above fourteen percent. Extending the horizon to five years, the fund continues to stand out with returns of more than twenty five percent compared to the benchmark’s twenty percent. An investor who placed one lakh rupees in this fund five years ago would today be sitting on over three lakh rupees, highlighting the wealth building potential of this scheme.

SBI ELSS Tax Saver Fund is one of the oldest and most widely subscribed options in this category. Launched in 2013, the fund manages more than thirty thousand crore rupees in assets, making it one of the largest players in the ELSS space. Its track record has been consistent with annualised returns of more than twenty three percent over three years and over twenty five percent across five years. This means that a lump sum investment of one lakh rupees would have doubled in three years and tripled over five years. Its wide base of investors and proven track record has made it a reliable choice for those who want both stability and growth in their tax saving portfolio.

HDFC ELSS Tax Saver Fund also dates back to 2013 and today manages assets of over sixteen thousand crore rupees. Its performance has been slightly lower than the other two funds but still very impressive. Over the past three years it has generated annualised returns of more than twenty one percent and over twenty five percent across a five year period. This again beats the benchmark index comfortably. An investor who committed one lakh rupees to this fund five years ago would today have close to three lakh rupees.

While these numbers paint a very encouraging picture, investors must remember that mutual fund returns are market linked. Past performance, no matter how strong, cannot guarantee future returns. Factors such as market volatility, global economic conditions, and company earnings will continue to influence fund performance. Therefore, while ELSS remains a powerful option for those looking to save on taxes and build wealth simultaneously, it is important to align investments with personal financial goals and risk appetite.

For young professionals just starting out, ELSS offers a dual advantage of compounding returns and tax efficiency. For experienced investors, these funds provide a disciplined approach to staying invested in equities for at least three years. In both cases, they remain a valuable addition to a balanced financial plan.

If you are considering ELSS for 2025, Motilal Oswal, SBI, and HDFC are three strong contenders with proven track records. Each comes with its own strengths, whether it is Motilal Oswal’s outperformance, SBI’s size and scale, or HDFC’s steady consistency. Choosing among them should depend on your individual comfort with risk, your preferred fund house, and your investment horizon.

 

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