Mirae Asset Tax Saver Fund: A Smart Investment Move?

The Mirae Asset Tax Saver Fund is an open-ended equity-linked savings scheme with a three-year lock-in period and tax benefits. It offers investors a chance to save taxes under Section 80C of the Indian Income Tax Act, 1961, with potential for long-term capital appreciation. The fund predominantly invests in equity and equity-related instruments, with a focus on large-cap stocks and debt instruments, following a conservative investment strategy. With a minimum investment amount of ₹99, it provides flexibility in investment styles and market capitalization. However, investors should be prepared for potential ups and downs in investment value and be able to tolerate moderately high risk.

Mirae Asset Tax Saver Fund's performance compared to peers

When deciding whether to invest in the Mirae Asset Tax Saver Fund, it is important to consider its performance compared to its peers.

The Mirae Asset Tax Saver Fund has been reported to have below-average performance among its peers. However, it has been able to generate better returns compared to other funds in the same category. The fund's average annual rolling returns over the last three years are compared against other funds from the same category, and it has been able to generate better returns. The fund's expense ratio is also lower than the category average, which leads to higher returns for investors.

The fund has a very high-risk level, and its portfolio is considered conservative, with most holdings in Large Cap stocks and debt instruments. The fund manager updated the portfolio less frequently than peers in the last year, indicating that the fund manager held stocks/bonds in the portfolio for longer durations.

In terms of returns, the fund has delivered 17.89% returns since its inception seven years ago, which is considered better than the category average.

Overall, while the Mirae Asset Tax Saver Fund has shown below-average performance compared to its peers in some aspects, it has also demonstrated strong returns and a lower expense ratio, which could make it a competitive investment option.

The benefits of investing in ELSS

The Mirae Asset Tax Saver Fund - Regular Plan is a mutual fund that seeks to generate long-term capital appreciation from a diversified portfolio of predominantly equity and equity-related instruments. It offers a tax exemption under Section 80C of the Indian Income Tax laws, with investments of up to Rs 1.5 lakh in a financial year being exempt from tax.

Now, here are the benefits of investing in ELSS (Equity Linked Savings Scheme):

Tax Benefits:

ELSS funds offer tax deductions under Section 80C of the Income Tax Act. You can claim deductions of up to Rs 1.5 lakh for investments in ELSS, saving up to Rs 46,800 in taxes annually. This makes it the only scheme that allows investors to save on taxes while earning high returns from equity fund investments.

Shortest Lock-in Period:

ELSS funds have a lock-in period of only 3 years, which is the shortest compared to other tax-saving options like Public Provident Fund (PPF) with a 15-year maturity or 5-year Fixed Deposits. This makes ELSS a more liquid investment option.

High Returns:

ELSS funds have the potential to generate significantly higher returns in the long run compared to most other tax-saving investment options. On average, ELSS funds have generated 15% returns, and some of the top-performing funds have delivered even higher returns.

Wealth Creation:

ELSS funds serve a dual purpose of tax saving and wealth creation. With long-term investments in ELSS, you can accumulate a substantial corpus. For example, a monthly investment of Rs. 12,500 for 20 years can help you build a corpus of Rs. 1.89 Crores.

Better Post-Tax Returns:

ELSS funds offer favourable tax treatment on long-term capital gains. If your total capital gain in the financial year of withdrawal exceeds Rs 1 lakh, you will be taxed at 10% on the amount exceeding this threshold. If your total profit is below Rs. 1 lakh, you don't have to pay any long-term capital gains tax.

Systematic Investment with SIP:

With Systematic Investment Plans (SIPs), you can invest a fixed sum regularly in ELSS funds, encouraging a disciplined savings habit. SIPs help you accumulate more units when the market is down and generate good returns when the markets are favourable.

Safety and Transparency:

Mutual funds, including ELSS, are highly regulated and transparent. All mutual fund companies in India fall under the purview of the Securities and Exchange Board of India (SEBI) and are required to make necessary disclosures.

Mirae Asset Tax Saver Fund's investment objective

The Mirae Asset Tax Saver Fund's investment objective is to generate long-term capital appreciation from a diversified portfolio of predominantly equity and equity-related instruments. The scheme does not guarantee or assure any returns.

The fund invests a minimum of 80% of its total assets in equity and equity-related securities of companies across industry sectors and market cap segments. The fund can also invest 0-20% of its total assets in money market instruments, debt securities, and G-Secs, etc.

The investment approach is a bottom-up approach: driven by value investing in growth-oriented businesses. The fund has the flexibility to invest across market capitalizations and select investment opportunities within this theme. The fund follows Mirae Asset's equity investment philosophy of selecting businesses based on large market opportunity, sustainable competitive advantages, ROI, and management with good corporate governance and thought leadership.

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 aim for capital appreciation over a long investment horizon. Investors should be able to remain invested for a minimum of 3-5 years and be able to tolerate moderately high risk.

Mirae Asset Tax Saver Fund's investment framework

The Mirae Asset ELSS Tax Saver Fund is an open-ended equity-linked savings scheme with a statutory lock-in period of 3 years and tax benefits. The fund's investment objective is to generate long-term capital appreciation from a diversified portfolio of predominantly equity and equity-related instruments. The scheme does not guarantee any returns.

The investment framework of the Mirae Asset ELSS Tax Saver Fund involves investing in a diversified portfolio of strong growth companies at reasonable prices across industry sectors. The fund has the flexibility to invest across market capitalizations and to select investment opportunities within this theme. It follows a bottom-up approach, focusing on companies delivering visible and sustainable earnings growth available at reasonable valuations. The fund adheres to Mirae Asset's equity investment philosophy of selecting businesses based on large market opportunities, sustainable competitive advantages, ROI, and good corporate governance. The fund manager aims to maintain a large base of stocks in the portfolio to mitigate concentration and liquidity risks.

The Mirae Asset ELSS Tax Saver Fund offers a Regular Plan and a Direct Plan, with a common portfolio and separate NAVs. Investors can choose between a Growth Option and a Dividend Option. The minimum investment amount is ₹99, with additional investments in multiples of ₹500. The fund has a minimum SIP investment of ₹500.

The fund is suitable for investors who want to save taxes under Section 80C of the Income Tax Act, aim for capital appreciation over a long investment horizon, and can remain invested for a minimum of 3-5 years. It carries a moderately high risk.

Mirae Asset Tax Saver Fund's suitability for investors

Mirae Asset Tax Saver Funds are suitable for investors who want to save on taxes under Section 80C of the Indian Income Tax Act, 1961. The funds offer tax exemption for investments of up to Rs 1.5 lakh in a financial year.

The funds are designed for investors with a long-term investment horizon, typically 3-5 years, who are seeking capital appreciation. Investors should be prepared for potential ups and downs in their investment value and be able to tolerate moderately high risk.

The funds are suitable for those with a twin objective of achieving long-term goals while saving taxes on their investments. The funds offer a diversified portfolio of predominantly equity and equity-related instruments, providing investors with flexibility across market capitalization, themes, and investment styles.

The minimum investment amount is low, starting at Rs 99, and the funds have a lock-in period of 3 years, making them a suitable option for those seeking a relatively liquid investment.

Frequently asked questions