IDFC Tax Advantage (ELSS) Fund

IDFC Tax Advantage (ELSS) Fund is managed by Aniruddha Naha since May 2013. The fund has given average returns compared to other tax saving funds. Investing in this fund enables to avail the income tax rebate, as permitted from time to time. If you are a new investor you can skip this fund for a better ELSS.

 

Where does IDFC Tax Advantage Fund invest your money?

IDFC Tax Advantage (ELSS) Fund has multi cap allocation which means your money will be invested in stocks of large, medium and small sized companies. About 31% of the fund’s money is allocated to stocks of mid size companies, 52% to stocks of large size companies and 15% to those of small companies. Mid size stocks can give kicker returns as they turn into large stocks but this happens not so frequently.

Suitable for what?
  • Saving on tax outgo
  • Child's education
  • Child's marriage
  • Planning for retirement
Not suitable for what?
  • Creating wealth
  • Short term needs
  • Lifestyle needs
How has IDFC Tax Advantage (ELSS) Fund performed in the past?

If you had invested Rs 1 lakh when the fund was launched in Dec 2008, your value of investments would be around Rs 1.61 lakhs. The performance has been close to the average returns of ELSS. 

Assume you had invested Rs 10,000 every month in IDFC Tax Advantage (ELSS) Fund through SIP from Dec 2008 today you would have around Rs 6.67 lakhs.

How will IDFC Tax Advantage (ELSS) Fund perform in the future?

Needless to say no one can predict the future of markets. We have firm belief in the future prospects of the Indian economy. If the Indian economy grows at 9% then the leading companies tend to de well. When the companies do well their stock prices follows their performance. So if you expect the economy to grow at 8% then you can expect top performing mutual funds to give you returns in excess of 14%.

Mutual fund schemes that have exposure to mid size companies tend to show results when their bet on few companies comes true. We advise you to avoid too much of star gazing and future prediction. Be reminded that equities are one of the asset classes that have the potential to beat inflation. Your aim for core portfolio should be to beat inflation.

How much to invest?

Minimum one time investment is Rs 500 and minimum SIP is Rs 500 per month. Do not make the mistake of investing in too many mutual fund schemes. At any point of time do not have more than two mutual fund schemes in your core portfolio. Core portfolio is investments that are made for your basic goals. IDFC Tax Advantage (ELSS) Fund can be part of the core portfolio.

Our recommendation for fresh investment
Not Recommended
Our recommendation for existing investment
Recommended
When to exit?

There is a lock-in period of 3 years on this fund, which means that you cannot sell this fund within 3 years of your purchase date. Withdraw when your goals are closer to achievement. Do not remove the money when the markets go up or down. Do not panic. Stick to your goals.

How frequently you need to monitor the performance?

Once you invest in the fund do not get into the habit of checking the NAV daily or monthly. Review the performance twice a year. Too much attention is not good.

 

What are the charges applicable?

No exit load applies for units withdrawn from this scheme. Expense ratio of IDFC Tax Advantage (ELSS) Fund is 2.86%. This is charged to recover the fund management company’s expenses on securities’ transactions, commissions, registrar fees, etc. Your mutual fund returns will be total returns less expense ratio.

What are the tax implications?

The returns in a mutual fund are absolutely tax free, provided you did not withdraw within 1 year. IDFC Tax Advantage (ELSS) Fund qualifies for sec 80C ELSS benefits, which means you can invest up to Rs 1 lakh a year in this fund and deduct the amount from your gross total income for computing income tax.

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