NJ ELSS Tax Saver Scheme - More than Just Tax-Saving Scheme
When it comes to tax-saving investments, finding an option that offers both growth potential and flexibility can be challenging. Equity Linked Savings Schemes (ELSS) stand out as a popular choice among investors looking to save taxes under Section 80C of the Income Tax Act, 1961.
Understanding Equity Linked Saving Scheme (ELSS)
Equity Linked Saving Scheme (ELSS) Mutual Fund is a type of tax saving mutual fund that offers investors the dual benefit of saving and investing. It is a popular choice among tax-saving investment options under Section 80C of the Income Tax Act, 1961, which allows taxpayers to claim a deduction of up to ₹1.5 lakh annually. ELSS funds come with a relatively shorter lock-in period of 3 years, providing both flexibility and the potential for higher returns.
How does ELSS Mutual Fund Work?
ELSS funds primarily invest in equity markets, providing investors with the opportunity to benefit from stock market growth. When you invest in an ELSS fund, your investment gets locked for three years. During this period, you cannot redeem your units, but the fund manager manages the investment, buying and selling stocks to maximize returns.
Key Features of Tax Saving Mutual Fund
A few of the key features of the ELSS Tax Saving Fund are:
- Tax-benefit: Investments in ELSS funds qualify for a deduction of up to ₹1.5 lakh under Section 80C.
- Disciplined Investment: A lock-in of a 3-year period encourages a disciplined and consistent investing habit among the investors.
- Equity-Linked Growth Potential: Since ELSS funds are equity-oriented, they have the potential to deliver higher risk-adjusted returns than traditional fixed-income tax-saving instruments.
- Shorter lock-in: Unlike other tax-saving instruments such as the Public Provident Fund (PPF) or National Savings Certificate (NSC), the ELSS Fund provides a shorter lock-period of 3 years.
Benefits of Investing in the NJ ELSS Tax Saver Scheme
Learn more about the benefits of investing in NJ ELSS Tax Saver Scheme:
- Rule-based Investing: NJ ELSS Tax Saver Scheme follows a rule-based investment approach that allows the implementation of consistent and disciplined investment decisions, backed by data.
- Quality-focused: The fund places a strong emphasis on quality. It selects companies with robust financials, strong growth potential, and sustainable business models.
- True-to-label: NJ ELSS Tax Saver Scheme is committed to being true-to-label, meaning being transparent and honest with the investors regarding its investment process.
- Concentrated portfolio with quality stocks: NJ ELSS Tax Saver Scheme is a 25-stock concentrated portfolio with a high focus on mid-cap and small-cap companies.
NJ ELSS Tax Saver Scheme
The NJ ELSS Tax Saver Scheme demonstrates a highly differentiated investment approach, as seen in its low overlap and high active share compared to both the Nifty 500 Index and its peer group.
Source: NJ Asset Management Internal Research, CMIE, NSE, ICRA MFI Explorer. NOTE: As on 30th September 2024. % Overlap Against Peer Group is calculated as the simple average of % overlap of NJ ELSS Tax Saver Scheme, respectively, against each of the live schemes i.e. all open-ended and close-ended (if any) in the ELSS category, respectively, based on the unhedged equity portfolio holdings as on 30th of September 2024. % Active Share is equal to (100% - % Overlap). Past data may or may not be sustained in future.
A comparison between the NJ ELSS Tax Saver Scheme and Nifty 500 for various quality parameters can be found in the following tables. These metrics reflect the NJ ELSS Tax Saver Scheme’s commitment to investing in companies with robust profitability, solid balance sheets, and efficient capital management.
NOTE: Simple averages of Quality parameters mentioned above for the respective portfolio constituents as on 31st October 2024. Lending companies are excluded from the calculation of Average Portfolio Debt To Equity for the portfolio. Financial companies are excluded from the calculation of Average Portfolio Current Ratio for portfolio. Source: NJ Asset Management Internal Research, CMIE, NSE
Performance of NJ ELSS Tax Saver Scheme
NJ ELSS Tax Saver has outperformed its benchmark, delivering a relatively higher return on investment. As of 31st October 2024, the NJ ELSS Tax Saver Scheme - Regular Plan - Growth Option has delivered a CAGR of 33.30%* since its inception, while its benchmark, the NIFTY 500 Total Return Index, generated a CAGR of 29.06%** over the same period.
As a result, by October 31, 2024, an investment of ₹10,000/- in the NJ ELSS Tax Saver Scheme since inception, would have grown to ₹14,860.00^, while the same amount invested in the NIFTY 500 Total Return Index, during the same time frame, would have grown to ₹14,212.97^^.
Inception date of the Scheme is June 16, 2023. Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments. The scheme has been in existence for more than 1 year but less than 3 years or 5 years, hence data for 3 year and 5 years is not provided. Different plans shall have different expense structures. In case the start/end date is a non business day, the NAV of the previous day is used for computation. Mr. Viral Shah is managing the Fund since June 19, 2023 and is also Fund Manager of NJ Flexi Cap Fund, NJ Overnight Fund and NJ Balanced Advantage Fund. Mr. Dhaval Patel is managing the scheme since June 19, 2023 and manages other scheme namely NJ Arbitrage Fund, NJ Overnight Fund, NJ Balanced Advantage Fund and NJ Flexi Cap Fund. For the performance of the Direct Plan of the Scheme and the other schemes managed by the Fund Managers, please click here.
Conclusion
For investors seeking to take advantage of investing in mutual funds along with saving taxes, ELSS Funds are an excellent option. Their equity-linked growth and shorter lock-in period features set them apart from other tax-saving options. The NJ ELSS Tax Saver Scheme, with its robust investment strategy, provides a reliable way to grow your wealth while taking advantage of tax benefits.
FAQs
1) What are the ELSS Funds?
Equity Linked Saving Scheme (ELSS) is a type of mutual fund that invests primarily in equities and equity-related instruments. They offer investors the dual benefit of potential capital appreciation and tax savings.
2) What is the lock-in period of ELSS?
A 3-year lock-in period is a must in ELSS mutual funds. A lock-in period means that you can not redeem or withdraw your investment for at least 3 years.
3) How can I invest in the NJ ELSS mutual fund?
Contact your financial advisor or Click on the following link to invest in NJ ELSS Mutual Fund.
Investors are requested to take advice from their financial/ tax advisor before making an investment decision.
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.
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