Mirae Asset Tax Saver Fund: Your Investment Guide

The Mirae Asset ELSS Tax Saver Fund is a mutual fund that offers investors the opportunity to save taxes under Section 80C of the Indian Income Tax Act, 1961. With a minimum investment amount of ₹500, investors can benefit from tax exemptions on investments of up to ₹1.5 lakh in a financial year. The fund has a lock-in period of 3 years, providing investors with both wealth creation and tax-saving opportunities. It is suitable for investors who are comfortable with a moderately high-risk investment strategy and can remain invested for a minimum of 3-5 years.

How to invest in Mirae Asset Tax Saver Fund online

Investing in the Mirae Asset Tax Saver Fund online can be done directly from the website of the fund house, Mirae Asset Mutual Fund. Alternatively, you can invest through platforms like MF Central and MF Utility. If you are uncomfortable with investing online, you can seek help from a mutual fund distributor, such as a bank.

The Mirae Asset ELSS Tax Saver Fund is an open-ended equity-linked saving scheme with a statutory lock-in period of 3 years and tax benefits. The minimum investment amount is ₹500, with additional investments also being a minimum of ₹500. The fund has a Regular Plan and a Direct Plan, with a common portfolio and separate NAVs. The Regular Plan has a higher expense ratio than the Direct Plan, leading to lower returns for investors.

The investment objective of the scheme is to generate long-term capital appreciation from a diversified portfolio of predominantly equity and equity-related instruments. The fund invests a minimum of 80% of its total assets in equity and equity-related securities across industry sectors and market cap segments. The remaining 0-20% of its total assets are invested in money market instruments, debt securities, and G-Secs.

The Mirae Asset Tax Saver Fund is suitable for investors who want to save taxes under Section 80C of the Income Tax Act, 1961, and who are aiming for capital appreciation over a long investment horizon. Investors should be prepared for possible negative returns and have a minimum investment horizon of 3-5 years.

Mirae Asset Tax Saver Fund's investment objective

The Mirae Asset Tax Saver Fund is an ELSS (Equity-Linked Savings Scheme) fund that offers investors long-term capital appreciation and tax benefits. The fund has a diversified portfolio of predominantly equity and equity-related instruments, with a focus on Large Cap stocks and debt instruments.

The investment objective of the Mirae Asset Tax Saver Fund is to provide investors with a combination of capital appreciation and tax savings. The fund seeks to generate long-term capital appreciation from its equity investments, which make up the majority of its portfolio.

As of October 2024, the fund has approximately 98.56% of its assets invested in domestic equities, with a breakdown of 51.5% in Large Cap stocks, 14.5% in Mid Cap stocks, and 7.45% in Small Cap stocks. The remaining 1.44% is invested in debt instruments and other assets.

The fund offers tax benefits under Section 80C of the Indian Income Tax laws, which allow investors to claim deductions on their taxable income for investments of up to Rs 1.5 lakh in a financial year. This tax exemption is a key feature of the fund, providing an additional incentive for investors beyond potential capital gains.

The Mirae Asset Tax Saver Fund is suitable for investors who are willing to invest for the long term, typically at least three years. These investors should also be comfortable with the possibility of moderate losses in their investments and the three-year lock-in period associated with the fund.

Overall, the investment objective of the Mirae Asset Tax Saver Fund is to provide investors with a balanced approach to wealth creation, combining potential capital appreciation from equity investments with the added benefit of tax savings under Indian tax laws.

Mirae Asset Tax Saver Fund's investment framework

Mirae Asset's investment framework for its ELSS Tax Saver Fund is centred around a diversified portfolio of strong growth companies at reasonable prices across industry sectors. The fund has a bottom-up approach, focusing on value investing in growth-oriented businesses. It offers flexibility to investors by allowing investment across market capitalisation, themes, and investment styles.

The fund has a minimum investment amount of ₹ 500, with multiples of ₹ 500 thereafter. It has a lock-in period of 3 years, providing tax benefits to investors. The fund is suitable for investors who want to save taxes under Section 80C of the Income Tax Act 1961, aim for capital appreciation, and can tolerate moderately high risk.

Mirae Asset's ELSS Tax Saver Fund has a conservative investment strategy, with holdings primarily in Large Cap stocks and debt instruments. The fund manager, Mr Neelesh Surana, follows the Mirae Asset Equity investment philosophy, selecting businesses based on large market opportunity, sustainable competitive advantages, ROI, and good corporate governance. The fund aims to have a large base of stocks to avoid concentration and liquidity risk.

The fund has a total expense ratio (TER) of 2.25% for the first ₹500 Crores, 2.00% for the next ₹250 Crores, and so on, with a balance of assets at 1.05%.

Mirae Asset Tax Saver Fund's advantages

Mirae Asset Tax Saver Fund offers a range of advantages for investors:

Tax Benefits

The fund offers tax benefits under Section 80C of the Indian Income Tax laws. Investments of up to Rs 1.5 lakh in a financial year in this fund are exempt from tax. This makes it an attractive option for investors looking to save on taxes while also investing in a diversified portfolio.

Long-Term Capital Appreciation

The scheme seeks to generate long-term capital appreciation. When you invest for five years or more, you can expect gains that beat the inflation rate and returns from fixed-income options. This makes it suitable for investors with a long-term investment horizon.

Diversified Portfolio

Mirae Asset Tax Saver Fund invests in a diversified portfolio of predominantly equity and equity-related instruments. As of 30-Jun-2023, the fund had invested 97.33% in equity, 2.67% in Cash & Cash Eq., and 0% in debt. This diversification can help reduce risk and provide more stable returns over time.

Conservative Investment Strategy

The fund's holdings are mostly in Large Cap stocks and debt instruments, indicating a conservative investment strategy. This approach may be attractive to investors who prefer a more stable and less risky investment option.

Strong Performance

Mirae Asset Tax Saver Fund has delivered strong returns since its inception. As of Jul 2023, it had delivered 17.89% returns. Additionally, as of Sep 2024, the fund's 1-year return was 41.67%, and its 3-year return was 65.03%. These returns are higher than the category average, indicating strong performance relative to its peers.

Convenience and Accessibility

Investing in Mirae Asset Tax Saver Fund is convenient and accessible. Mutual funds can be bought directly from the website of the fund house, Mirae Asset Mutual Fund, or through platforms like MF Central and MF Utility. Most banks also act as mutual fund distributors, so investors can seek assistance from their bank if needed.

Mirae Asset Tax Saver Fund's risks

Investing in the Mirae Asset Tax Saver Fund comes with risks, and investors should be aware of the possibility of losing money. Here are some key points to consider regarding the risks associated with this fund:

Risk of Negative Returns

The Mirae Asset Tax Saver Fund has been rated as having a "Very High Risk" of negative returns by SEBI's Riskometer. This means that there is a significant chance that investors may experience losses on their investments. It is important for investors to carefully consider their risk tolerance and financial goals before investing in this fund.

Lock-in Period

The Mirae Asset Tax Saver Fund has a statutory lock-in period of 3 years. This means that investors cannot withdraw their money from the fund before completing three years from the date of investment. Investors need to be comfortable with this lack of liquidity and ensure that they will not need access to the invested funds during this period.

Market Risk

As a mutual fund that invests predominantly in equity and equity-related instruments, the performance of the Mirae Asset Tax Saver Fund is closely tied to the stock market. The fund's investments in Large Cap, Mid Cap, and Small Cap stocks can be affected by market volatility, sector-specific risks, and economic downturns. Investors should be prepared for potential losses due to market fluctuations.

Investment Strategy Risk

The fund's investment strategy may not always be profitable, and there is a risk that the fund managers' decisions may not yield the expected returns. The fund's performance also depends on the expertise and skill of the fund managers in selecting the right investments and managing the portfolio effectively.

Tax Saver Fund Specific Risks

While the fund offers tax benefits under Section 80C of the Indian Income Tax laws, investors should be aware that these benefits may change over time due to alterations in tax laws and regulations. Additionally, there is a risk that the actual tax savings realized by investors may be lower than expected, depending on their individual tax situations and applicable tax rates.

In conclusion, while the Mirae Asset Tax Saver Fund offers the potential for long-term capital appreciation and tax savings, it is important for investors to carefully consider the risks involved. Understanding the potential downsides and conducting thorough research before investing is essential to making informed investment decisions.

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