Canara Robeco ELSS Tax Saver: Unlocking Double Benefits - Tax Savings and High Returns

As investors continue to explore avenues for tax optimization and high returns, equity-linked saving schemes (ELSS) have become increasingly popular due to their dual benefits. Among these, the Canara Robeco ELSS Tax Saver stands out for its impressive performance and rewarding tax advantages. In this article, we delve into the features, benefits, and potential of this fund, highlighting why it remains a top choice for those seeking both tax efficiency and substantial financial gains.

Introduction to ELSS

Equity-Linked Saving Schemes (ELSS) are a type of mutual fund that not only offers high returns but also provides tax benefits under Section 80C of the Income Tax Act of India. By investing in ELSS, individuals can claim deductions up to Rs 1.5 lakh per annum, significantly reducing their taxable income. Unlike traditional fixed deposits or Public Provident Funds (PPF), ELSS investments come with a relatively shorter lock-in period of just three years, making them more attractive for investors seeking flexibility along with tax optimization.

Understanding Canara Robeco ELSS Tax Saver

The Canara Robeco ELSS Tax Saver, launched on February 5, 2009, is one of the premier products from Canara Robeco Mutual Fund, a company that has been in operation since 1993. The fund is managed by experienced professionals, Vishal Mishra and Shridatta Bhandwaldar, who have honed their skills over years of navigating India's dynamic stock market.

Key Features

• Investment Strategy: The fund aims to achieve long-term capital appreciation by investing predominantly in equities, with a focus on both primary and secondary markets. It also explores opportunities in international markets through instruments like ADRs/GDRs[2][5].
• Tax Benefits: Eligible for tax deductions under Section 80C, it helps investors save up to Rs 46,800 annually[1][5].
• Lock-in Period: The fund comes with a mandatory lock-in period of three years, making it more accessible compared to other tax-saving instruments like PPF[1][5].
• Returns: It has delivered impressive returns over the years, with a five-year return of 24.68%[5].
• Risk Profile: Classified as Very High Risk by SEBI's riskometer, it is suitable for investors seeking long-term capital appreciation[2][4].

Investment Highlights

Top Holdings: As of recent data, the fund's top holdings include prominent companies like HDFC Bank, ICICI Bank, Infosys, Reliance Industries, and Bharti Airtel[1].

Sector Allocation: The fund has a considerable allocation to large caps, providing stability, while also investing in mid and small caps to capture growth opportunities[5].

Expense Ratio: The expense ratio for the Canara Robeco ELSS Tax Saver is around 1.71%, which is competitive in the ELSS segment[2][5].

Why Choose Canara Robeco ELSS Tax Saver?

Benefits of ELSS over Other Options

When comparing ELSS funds with other tax-saving options like Tax Saving Fixed Deposits (FDs) or Public Provident Funds (PPF), several advantages come to the forefront:

• Higher Returns: ELSS funds, including Canara Robeco ELSS Tax Saver, offer significantly higher average returns compared to tax-saving FDs and PPFs. Historically, ELSS funds have provided around 12% returns, overshadowing the 6% from tax-saving FDs and 8% from PPFs[1].
• Lower Lock-in Period: The three-year lock-in for ELSS is much shorter than the 15-year lock-in period of PPF and the five-year lock-in for tax-saving FDs[1].
• Tax Efficiency: ELSS investments are eligible for tax deductions under Section 80C, similar to PPF and tax-saving FDs, but offer higher returns post-tax[1][2].

Investment Strategy for Different Scenarios

1. Lump Sum vs. SIP: For investors with a large amount to invest, lump sum investments can be beneficial during market dips. However, for most, a Systematic Investment Plan (SIP) is advisable as it helps in averaging costs over time, reducing the impact of market volatility[2].

2. Long-Term Focus: Since ELSS is a high-risk, high-return investment, it's crucial to maintain a long-term focus. This helps in smoothing out market fluctuations and maximizing returns.

3. Diversification: Even within ELSS, diversifying your portfolio across different funds can mitigate risks and enhance overall returns.

Conclusion

For investors looking to maximize their tax savings while also growing their wealth over time, the Canara Robeco ELSS Tax Saver presents an attractive opportunity. With its strong historical performance, competitive risk profile, and tax benefits, it stands out as one of the top choices in the ELSS category. As the investment landscape continues to evolve, funds like these will remain pivotal for investors aiming to strike a balance between tax efficiency and high returns.

Frequently Asked Questions (FAQs)

1. What is the minimum investment in Canara Robeco ELSS Tax Saver?

• The minimum investment required is Rs 500, with no entry load and no exit load[5].

1. Can investments be made in Canara Robeco ELSS Tax Saver through SIP?

• Yes, investments can be made through SIP, which is recommended for most investors to average out market risks over time[2].

1. What is the three-year returns for Canara Robeco ELSS Tax Saver?

• The three-year returns for the fund stand at approximately 12.37%[2].

1. How does Canara Robeco ELSS Tax Saver compare with other tax-saving options?

• It offers higher returns than tax-saving FDs and PPFs, with a shorter lock-in period compared to PPF[1].

1. Where can one purchase Canara Robeco ELSS Tax Saver?

• Investments can be made directly from the Canara Robeco Mutual Fund website or through platforms like MF Central and MF Utility[2].

With its robust track record and tax advantages, Canara Robeco ELSS Tax Saver is positioned as a premier choice for those seeking both financial growth and tax efficiency in their investment portfolios. Whether you're a seasoned investor or just starting out, this fund is certainly worth considering.