Best ELSS Mutual Funds Based On 5 Year Sip Return November 2024

_{Published on: 03 Dec, 2024 06:00}

• Motilal Oswal ELSS: Highest 5-year XIRR at 32.73%, strong risk-adjusted returns, ideal for growth-focused investors.
• SBI Long Term Equity: 5-year XIRR of 30.19%, low volatility, suitable for moderate-risk, long-term investors.
• HDFC Taxsaver: 5-year XIRR at 27.49%, low standard deviation, best for conservative investors seeking steady returns.
• Quant ELSS: 5-year XIRR of 31.40%, high volatility, fits aggressive investors aiming for long-term capital appreciation.
• Bank of India ELSS: 5-year XIRR at 27.71%, balanced risk-reward profile, good for stable, reliable growth seekers.

The table below shows the return performance of ELSS funds on 29 November 2024. 

 

Investing in Equity Linked Savings Schemes (ELSS) is a popular choice for investors seeking both wealth creation and tax benefits. ELSS mutual funds, as part of Section 80C of the Income Tax Act, allow investors to save on taxes while potentially enjoying the high growth associated with equity investments. In this post, we explore the top ELSS funds based on their 5-year XIRR, focusing on funds that have consistently delivered strong returns and maintained favorable risk metrics. This approach helps ensure that our selections offer not only high returns but also reasonable risk management.

The 5-year XIRR (Extended Internal Rate of Return) provides an accurate, annualized return metric over five years, offering insight into a fund's performance over a meaningful period. This selection criterion is especially relevant for ELSS funds, which come with a mandatory three-year lock-in period. By assessing the 5-year XIRR, we can identify funds that have weathered market fluctuations over a longer period, proving their resilience and growth potential.

Here’s a breakdown of the top ELSS funds, with a detailed look at each fund’s return performance, risk characteristics, and what makes them stand out.

To provide a comprehensive evaluation of these funds, we incorporate several key risk metrics:

1. Sharpe Ratio: Measures risk-adjusted return, with a higher Sharpe Ratio indicating better compensation for risk. Funds like SBI Long Term Equity and HDFC Tax Saver boast high Sharpe Ratios, suggesting their ability to generate superior returns for the risk taken.

2. Standard Deviation: Reflects the volatility of returns. A lower standard deviation, such as that seen in HDFC Tax Saver, implies lower fluctuation, making it a more stable investment option.

3. Max Drawdown: Indicates the fund’s largest drop from a peak to a trough, which is crucial for assessing downside risk. Investors looking to avoid large dips may favor funds with lower max drawdowns, like SBI Long Term Equity Fund and HDFC Tax Saver.

4. Value at Risk (VaR): Provides an estimate of potential loss over a specified period, offering insight into worst-case scenarios. For instance, Quant ELSS has a higher VaR of -19.99%, suggesting a greater potential loss during extreme downturns, whereas HDFC Tax Saver’s VaR of -11.74% is more conservative.

For investors seeking aggressive growth, Motilal Oswal ELSS Tax Saver Fund stands out with its excellent returns and risk management. Conservative investors may find HDFC Taxsaver appealing due to its low volatility and steady performance. Those looking for a balanced approach can consider SBI Long Term Equity Fund.

Each of these funds offers unique strengths, allowing investors to align their choices with their financial goals and risk preferences. With robust performance and tax-saving benefits, ELSS funds remain a compelling choice for wealth creation.