Top 5 ELSS Funds for 2025: Tax Savings With Wealth Creation

If you’re aiming to hit two financial goals with one stone—building wealth while saving taxes—Equity-Linked Saving Schemes (ELSS), commonly known as tax-saving mutual funds, can be a fitting choice. These funds not only offer tax deductions under Section 80C but also inculcate long-term investing discipline through a mandatory three-year lock-in period.

In this article, we’ll take a closer look at the top 5 ELSS for 2025 based on their 5-year CAGR returns.

Top 5 ELSS for 2025

Here are the top-performing ELSS based on their 5-year CAGR returns:

Note: Sorted on the basis of 5-year CAGR as of December 18, 2024. 

1. Quant ELSS Tax Saver

• Launch Date: April 2000
• Objective: Generate capital appreciation by predominantly investing in equity shares with growth potential.
• Expense Ratio: 1.71% (as of 30th Nov 2024)
• Investment Requirements: Minimum investment of ₹500, additional investments from ₹500, and SIP starting at ₹500.

2. Bank of India ELSS Tax Saver

• Launch Date: February 2009
• Objective: Build a diversified portfolio of sustainable businesses without biases toward market capitalisation or sector.
• Expense Ratio: 2.08% (as of 2nd Dec 2024)
• Investment Requirements: Minimum lump sum and additional investments start at ₹500, with a minimum SIP of ₹500.

3. Motilal Oswal ELSS Tax Saver Fund

• Launch Date: January 2015
• Objective: Generate long-term capital appreciation through a diversified equity portfolio.
• Expense Ratio: 1.83% (as of 29th Nov 2024)
• Investment Requirements: Minimum lump sum and additional investments start at ₹500, with a minimum SIP of ₹500.

4. SBI Long Term Equity Fund

• Launch Date: May 2007
• Objective: Achieve capital appreciation by investing in equities, cumulative convertible preference shares, and convertible debentures.
• Expense Ratio: 1.59% (as of 25th Nov 2024)
• Investment Requirements: Minimum lump sum and additional investments start at ₹500, with a minimum SIP of ₹500.

5. Parag Parikh ELSS Tax Saver

• Launch Date: July 2019
• Objective: Long-term capital appreciation through a diversified equity portfolio, adhering to the ELSS 2005 scheme rules.
• Expense Ratio: 1.72% (as of 25th Nov 2024)
• Investment Requirements: Minimum lump sum and additional investments start at ₹500, with SIP starting at ₹1,000.

What is ELSS?

The Securities and Exchange Board of India (SEBI) defines ELSS as equity-oriented mutual funds investing a minimum of 80% of their total assets in equity and equity-related instruments. These funds operate under the Equity-Linked Savings Scheme 2005, as notified by the Ministry of Finance.

ELSS funds come with a mandatory 3-year lock-in period, which encourages investors to remain committed for the long term. This period provides the fund manager sufficient time to deploy and grow your investment in equity instruments, aiming for capital appreciation.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.