Tax Saver Fund Direct-Growth is an ELSS or equity-linked saving scheme which is eligible for income tax deduction under Section 80C of the Income Tax Act. ELSS also comes with mandatory lock-in periods, such as all tax-saving investment options available under Section 80C. The minimum lock-in period for tax saving mutual fund schemes is three years. It means that you cannot sell them before the completion of the lock-in period. Since you are investing in SIP, you will have to wait to complete the lock-in period for each SIP installment.
The main objective of the tax saver fund scheme is-
The scheme aims to produce medium to long-term capital from a diversified portfolio consisting primarily of equity and bond-linked corporate securities and enable investors to take advantage of the total income deduction allowed under the income tax act.
The fund’s portfolio is concentrated in large-cap stocks, followed by mid-cap stocks, micro-cap stocks, and small-cap stocks. Large-cap shares hold over 67 percent of the fund’s AUM, while small and midcap stocks hold 9 percent and 12 percent, respectively. The fund’s portfolio consists of 10% micro-cap stocks.
The fund has a current asset allocation of over 97% in equity and equity-related securities. The remaining 3% is divided almost equally between debt instruments and cash and cash equivalents.
In terms of sector allocation, fund investment in various sectors such as –
- Banks (24 percent)
- Finance (13 percent)
- Motor vehicles (5 percent)
- Petroleum products (6.5 percent)
- Cement and cement products (4.2 percent)
- Non-durable consumers (6.4 percent).
We can note that the fund is a heavyweight in the banking and finance sector, which is more than one-third of the total funds.
Top stock holdings for this fund are-
- HDFC Bank Limited (6.69%)
- ICICI Bank Limited (4.64%)
- Tata Steel Ltd, (4.28%)
- State bank of India (3.95%)
- L&T Limited (3.31%).
The Tax Saver Fund Direct Growth has been successful in creating funds for its long-term investors. It is suitable for investors with high capital appreciation in the long term. Tax-saving investors need long-term financial objectives, such as retirement plans, children’s education can be found in this fund.
Tax saver fund scheme details-
- PLAN- Growth
- Option- Growth
- 1 Yr return- 22.46%
- 3 Yrs CAGR returns- 11.21%
- 5 Yrs CAGR returns- 11.12%
- NAV as on 27 Dec- ₹ 55.56
- Expense ratio- 0.99
- Lock-in period- 19.29%
- Fund Size (Cr)- ₹ 5642.77
Tax Implications on Tax saver fund scheme
If you redeem within one year, the return is taxed at 15%. After one year, you will have to pay a 10% LTCG tax on yields of 1 lakh + in a financial year.
How can you invest in Tax saver fund direct plan?
Tax Saver Fund is available for online investment. Just log in to your account, select the fund “Tax Saver Fund Direct-Growth” make the payment and start your SIP!