The Mutual Fund Show: Are ELSS Funds The Right Choice For Tax Saving?

If you invest in an equity linked savings scheme, in addition to equity-linked growth, you can claim a tax rebate of up to Rs 1,50,000 under the provisions of Section 80C of the Income Tax Act, 1961, said Aditya Nain, author, professor and creator.

Query 1: The multiple ELSS funds (all direct plan funds) I have invested in have matured, and I am looking for some liquidity. With the current bond yield, would it be the right call to redeem these safer instruments, or should I invest in MFs with more small-cap exposure? I have an urgent requirement for Rs 1.5 lakh cash.

Name: Swayam | Age 28 years

Aditya Nain: Now is a good time to book some of the profits, as the market is quite high. You can, maybe, invest in ultra short-duration fund, low-duration fund. For shorter time horizon—under two years—my comfort is towards the low duration funds.

Kalpesh Ashar: You need to cut down on the number of ELSSs. One or two ELSSs are good enough for a portfolio. It is a completely large-cap oriented portfolio. Hence, he needs diversification of portfolio. I would suggest a good flexi, multi or a mid-cap fund.