For many of you, ELSS funds are no longer just a last-minute tax-saving tool. They are increasingly being seen as a gateway to long-term equity investing. These tax-saving funds offer the dual benefit of tax deductions under Section 80C and the potential to build wealth over time.
With market volatility creating fresh opportunities, investors also look beyond tax season and focus on ELSS schemes that can deliver consistent long-term returns.
And despite market volatility over the past few years, ELSS funds have continued to reward patient investors. Backed by a strong post-pandemic rally, rising retail participation, and improving corporate earnings, several tax-saver funds have delivered double-digit returns over the long term.
According to Value Research data, the ELSS category has generated average annualised returns of 13.76% in a three-year timeframe and 12.54% in 5-year timeframe. But some individual schemes have done even better.
Here’s a closer look at three top-performing ELSS funds — Motilal Oswal ELSS Tax Saver Fund, Quant ELSS Tax Saver Fund, and SBI ELSS Tax Saver Fund — and how they compare on returns, portfolio strategy, and risk.
Top ELSS funds based on 5-year returns
Among the best-performing tax-saving mutual funds over the past five years, Motilal Oswal ELSS Tax Saver Fund has delivered the highest annualised return of 19.8%. Quant ELSS and SBI ELSS have also posted strong returns of around 18%.
| Fund | 5-year annualised returns | 5-year SIP returns |
| Motilal Oswal ELSS Tax Saver Direct | 19.80% | 19.53% |
| Quant ELSS Tax Saver Direct | 17.98% | 15.66% |
| SBI ELSS Tax Saver Direct | 17.99% | 15.73% |
| Source: Value Research |
Motilal Oswal ELSS Tax Saver Fund: Highest 5-year returns
Motilal Oswal ELSS Tax Saver Fund has emerged as the top performer among the three on a five-year basis. The fund follows a relatively concentrated strategy and has exposure to sectors such as electrical equipment, finance, and automobiles.
Its top holdings include Multi-Commodity Exchange of India, Apar Industries and Ather Energy.
The fund has delivered a 24.47% annualised return over three years and 18.34% over 10 years, outperforming both the benchmark BSE 500 TRI and the broader ELSS category average.
However, the fund also comes with relatively high volatility. Its beta of 1.2 suggests it tends to move more sharply than the broader market, making it more suitable for aggressive investors with a long investment horizon.
Quant ELSS Tax Saver Fund: Strong long-term wealth creator
Quant ELSS Tax Saver Fund has also delivered impressive long-term returns. Over the past 10 years, the scheme has generated annualised returns of nearly 21%, making it one of the strongest long-term performers in the category.
The fund invests across sectors such as energy, financials, industrials, and consumer discretionary. Its top holdings include Reliance Industries, ICICI Bank, and Larsen & Toubro.
One of the key positives for the fund is its strong alpha generation, meaning it has consistently outperformed its benchmark over time. The scheme’s Sortino ratio also indicates relatively better downside risk management compared to many peers.
That said, Quant funds are known for active portfolio churn and tactical bets, which may not suit conservative investors uncomfortable with short-term swings.
SBI ELSS Tax Saver Fund: Lower volatility with steady returns
SBI ELSS Tax Saver Fund is among the oldest tax-saving mutual funds in India, having been launched in 1993. Compared to the other two schemes, it has shown relatively lower volatility while still delivering strong long-term returns.
The fund’s portfolio is tilted towards large-cap names such as ICICI Bank, Reliance Industries, HDFC Bank, and Tata Steel. Financial services and energy remain its key sector exposures.
On a three-year basis, the fund has delivered annualised returns of over 20%, comfortably beating the benchmark index.
Its beta of 1 indicates the fund broadly moves in line with the market, making it relatively more stable than some high-risk peers in the ELSS category.
Who should invest in ELSS funds?
ELSS funds are suitable for investors looking to save tax under Section 80C while also building long-term wealth through equity exposure.
Unlike traditional tax-saving options such as PPF or tax-saving fixed deposits, ELSS funds come with the shortest lock-in period of three years and offer the potential for higher inflation-beating returns.
However, these funds invest in equities and can see sharp market fluctuations in the short term. They are therefore better suited for investors with a higher risk appetite and an investment horizon of at least five to seven years.
Investors should also remember that past performance does not guarantee future returns. Factors such as risk tolerance, financial goals, and asset allocation should always be considered before investing.
Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Mutual fund investments are subject to market risks. Please read all scheme-related documents carefully before investing.
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