What are ELSS Funds?

What are ELSS Funds?

An equity-linked saving scheme (ELSS) is an equity mutual fund scheme which invests a minimum of 80% of its total assets in equity and equity-related instruments. It is an open-ended scheme with a lock-in period of 3 years.

When you invest in an ELSS fund, you can avail deduction from your taxable income under Section 80C of the Income Tax Act. Features of an ELSS fund are as follows:
  1. Income tax benefits under Section 80C of the Income Tax Act
  2. Minimum Rs. 500 and no maximum investment amounts
  3. Potential to give inflation-beating high returns
  4. Low lock-in period compared to other tax-saving investment products
  5. Investment options: Lump sum and SIP
  6. No exit load
  7. Diversification as fund manager invests the scheme money into large, mid, and small-cap stocks across market capitalisation

    • Related Articles

    • Who manages Index Funds?

      Just like actively managed mutual funds, index funds are also managed by fund managers. But fund managers have a little role to play, because constituents of index funds seldom change. Managers just buy and hold all the securities of a particular ...

    • Why should you invest in index funds?

      Low Cost: Since index funds are passively managed, the total expense ratio (TER) is very less as compared to the actively managed ones. While an actively managed fund may charge you anything between 1-2% as TER, an index fund would typically charge ...

    • Why should you not invest in index funds?

      Index funds are built to replicate the index and most active fund managers charge fees to outperform indexes. Therefore, an investor who is purely looking to do better than the index should not invest in index funds. It’s important to point out that ...

    • Why are index funds popular in other parts of the world?

      Index funds are considered as ideal for constructing a core portfolio for long term wealth creation due to their diversification benefits, low cost and low portfolio churn. Globally, Index funds are popular due to the following reasons – Easy - Index ...

    • Are all index funds the same?

      All index funds are not same because different index funds track different indices. But the philosophy behind investing remains the same.  There are different types of indices in India: Benchmark indices like BSE Sensex and NSE Nifty Sectoral indices ...