ELSS are equity mutual funds in which 80% of the money invested in these schemes are invested in equities. The best ELSS funds offer tax deduction to the investors and have a lock-in period of three years, which is the lowest in the category of tax-saving investments. Under the old regime, one could claim tax deduction on a maximum investment of 1.5 lakhs in a financial year under section 80C.
However, ELSS are equity-oriented mutual fund schemes, and one must understand the risks associated with equity investments and the volatility of equity markets before investing in ELSS.
Best 5 ELSS Mutual Funds
1. Motilal Oswal ELSS Tax Saver Fund
Motilal Oswal ELSS Tax Saver Fund is among the best-performing ELSS funds over the long-term horizon. According to the data available as of July 31, 2026, the fund generated annualized returns of 16.31% over five years and 20.23% over three years. The fund size of Motilal Oswal ELSS Tax Saver Fund was around ₹4,862 crore as of July 31, 2026.
Motilal Oswal ELSS Tax Saver Fund caters to the investors’ long-term wealth creation needs by allowing them to save tax while staying invested in an equity fund, which bears a comparatively high risk factor.
2. SBI ELSS Tax Saver Fund
SBI ELSS Tax Saver Fund is among the top-5 ELSS funds as it is one of the largest and oldest schemes in the ELSS category. According to the data available as of July 2026, SBI ELSS Tax Saver Fund had the AUM of ₹31,839 crore. The five-year and three-year annualized returns of this fund were 16.28% and 15.71%, respectively, as of July 31, 2026.
SBI ELSS Tax Saver Fund is a preferred choice for those investors who seek to create wealth over the long-term while saving tax as it has a good brand name and a huge AUM.
3. HDFC ELSS Tax Saver Fund
HDFC ELSS Tax Saver Fund is another popular ELSS scheme with an investment objective to help investors meet their tax-saving needs while letting their money grow over the long run. As of July 31, 2026, this fund had generated annualized returns of 15.83% and 14.31% over five years and three years, respectively. HDFC ELSS Tax Saver Fund had an AUM of ₹15,685 crore as of July 31, 2026.
4. Quant ELSS Tax Saver Fund
Quant ELSS Tax Saver Fund is another large-cap ELSS scheme. As per the data available as of July 30, 2026, Quant ELSS Tax Saver Fund has delivered annualized returns of 14.27% and 15.07% over five years and three years, respectively. The AUM of Quant ELSS Tax Saver Fund was ₹13,166 crore as of July 30, 2026.
This ELSS scheme has seen a more active approach to build the portfolio, which has led to higher volatility.
5. JM ELSS Tax Saver Fund
JM ELSS Tax Saver Fund had delivered an annualized return of 14.68% over five years as of July 30, 2026. Over three years, the returns of this ELSS scheme stood at 15.91%. However, the AUM of this scheme was significantly low at ₹231 crore as of July 30, 2026.
Should You Invest in ELSS?
ELSS funds allow investors to reduce their taxable income by ₹1.5 lakh under section 80C of the income-tax act. ELSS funds carry the risks of equity investments, which are volatile in nature. Therefore, ELSS are suitable for investors with a long-term investment horizon and a high-risk appetite. While choosing an ELSS scheme for investment, one shouldn’t solely rely on historical performance; one must consider several factors like the risk profile, strategy, expense ratio, fund manager, consistency, and liquidity in addition to potential returns.
Disclaimer: Mutual fund investments are subject to market risks. Past performance does not indicate future returns. It is advisable to consult a financial advisor before making any decisions regarding mutual fund investments.