Reliance Tax Saver Fund: A Smart Investment Move?

Reliance Tax Saver Fund is an open-ended equity scheme that aims at long-term capital appreciation. The fund has been in the bottom quartile for 1-year, 3-year and 5-year periods and has been underperforming both its benchmark and category. However, it is a good fund for investors looking for long-term capital growth at minimum possible risk. The fund has a mandatory lock-in period of three years and provides tax benefits under Section 80C of the Income Tax Act. It is important to note that the money committed to the fund cannot be redeemed until the completion of the lock-in period.

Reliance Tax Saver Fund: Good or bad investment?

The Reliance Tax Saver Fund is an open-ended equity scheme that aims at long-term capital appreciation. The fund is flexible and can be tailored to the investment requirements of different customers. It is best suited for investors looking for long-term capital growth at a minimum possible risk. The fund is now known as the Nippon India Tax Saver (ELSS) Fund.

Advantages

The Reliance Tax Saver Fund has several advantages. Firstly, it offers tax benefits, allowing investors to save up to Rs. 1.5 lakh under Section 80C of the Income Tax Act. Secondly, it has provided good returns over the years, with a 5-year return of 15.51% as of February 2019. The scheme has outperformed its benchmark and category averages over 10 years, with a return of 15.40%. It also has a moderate to moderately high risk, making it suitable for investors who want to balance risk and return. The fund also offers a Systematic Investment Plan (SIP) option, which allows investors to invest a fixed amount at regular intervals, reducing the impact of market fluctuations.

Disadvantages

However, there are also some disadvantages to consider. The fund has underperformed in recent years, ranking in the bottom quartile for 1-year, 3-year, and 5-year periods. It has been a poor performer in the tax-saving category, underperforming its benchmark and category in the 1-, 3-, and 5-year periods. Additionally, there is a mandatory lock-in period of three years for each SIP installment, which may not suit investors who want more flexibility.

Overall, the Reliance Tax Saver Fund can be a good investment option for those seeking long-term capital growth with moderate risk. However, the fund's recent underperformance should be carefully considered before investing. It is always recommended to consult with a financial advisor to determine if this fund is suitable for your investment goals and risk tolerance.

Reliance Tax Saver Fund: Performance analysis

The Reliance Tax Saver Fund is an open-ended equity scheme that aims for long-term capital appreciation. It is suitable for investors seeking long-term capital growth with minimal risk. The fund has a lock-in period of three years and provides tax benefits under Section 80C of the Income Tax Act.

Recent Performance

The fund has experienced a mix of returns over the years, with some periods of strong performance and others of moderate results. In the past, it has been ranked five stars for its exceptional returns, although this ranking has fluctuated over time.

As of February 2019, the fund outperformed its benchmark return of 13.54% by nearly 2% over a five-year period. However, according to an assessment in July 2019, the fund was in the bottom quartile for 1-year, 3-year, and 5-year periods.

Recommendations from Experts

Financial experts have differing opinions on the fund. Here are some recommendations:

• Subhash Chawan, a Financial Planner at Moat Wealth Advisors, suggests that the Reliance Tax Saver Fund is a good fund for investing.
• Veena Malgonkar, a certified financial planner at KM Wealth Solutions, advises against continuing with the scheme, suggesting a switch to Mirae Asset Tax Saver Fund due to the fund's poor performance in recent years.
• Prableen Bajpai, Founder & Managing Partner at Finfix Research & Analytics, acknowledges the fund's underperformance compared to its peers but cautions against making a hasty exit decision during unfavourable market conditions.

Key Considerations

When considering the Reliance Tax Saver Fund, it is important to remember that tax-saving funds, in general, are meant for long-term investment horizons. While the fund has had periods of underperformance, it is essential to evaluate its performance over a longer time frame and consider your investment goals and risk tolerance.

Additionally, the fund offers flexibility in dealing with diverse investment requirements, and investors have the freedom to withdraw their funds at any time. The fund also provides a range of flexible options to help investors multiply their wealth through different products.

Reliance Tax Saver Fund: Eligibility criteria

The Reliance Tax Saver Fund is an open-ended equity scheme that aims for long-term capital appreciation. This scheme is flexible and can accommodate the investment requirements of different customers. It is ideal for investors seeking long-term capital growth with minimal risk.

The following entities are eligible to invest in the Reliance ELSS Fund:

• Adult Indian residents, either singly or jointly (up to three)
• Parents or legal guardians investing on behalf of minors
• Hindu Undivided Family (HUF) through its Karta
• Societies registered under the Societies Registration Act, 1860
• Companies and corporate bodies
• Public sector undertakings
• Banks, financial institutions, and investment institutions
• Foreign institutional investors registered with SEBI
• People of Indian origin and Non-Resident Indians (NRIs)
• Investors of foreign portfolio
• Religious and charitable trusts
• Corporations and insurance companies registered with IRDA
• Scientific organisations and industrial research
• Qualified foreign investors
• Employee and retirement benefit funds such as provident funds, gratuity, and pensions
• Overseas financial companies that have invested in India

Note that this is an indicative list, and investors can consult financial advisors to determine if the scheme suits their needs and risk profile.

The Reliance Tax Saver Fund is a tax-saving mutual fund that provides returns of 10.80% and 15.51% over three and five-year periods, respectively. It has a lock-in period of three years, and investors cannot redeem their investment until this period is complete. The fund aims to balance investments in large-cap and mid-cap companies, fostering potential leaders with high growth prospects in the medium term (2-3 years).

The fund has a minimum investment requirement of Rs. 500, with subsequent investments made in multiples of Rs. 500. It offers a Systematic Investment Plan (SIP) option, allowing investors to contribute a fixed amount at regular intervals instead of a lump sum.

Reliance Tax Saver Fund: Pros and cons

Pros

Reliance Tax Saver Fund is a good fund for investors looking for long-term capital growth at minimum possible risk. The fund has been described as an aggressive performer, outshining its benchmark index and category average with 15.40% returns over 10 years. It is an open-ended equity scheme, which means it is flexible enough to deal with the investment requirements of different customers. The scheme has a mandatory lock-in period of three years, which is standard for ELSS funds, and provides tax benefits of up to Rs 1.5 lakh under section 80C of the Income Tax Act. The fund has no entry or exit load, and investors can withdraw their funds anytime and anywhere.

Cons

Reliance Tax Saver Fund has been described as a poor performer in the tax-saving category, underperforming both its benchmark and category in the one-, three-, and five-year periods. The fund has experienced its ups and downs, with moderate performance following an initial chart-busting performance that led to a five-star ranking in 2014-15. The scheme has invested around 40% in small and mid-cap segments, which have been beaten down during certain market conditions.

Reliance Tax Saver Fund: How to invest?

The Reliance Tax Saver Fund is an open-ended equity scheme that aims at long-term capital appreciation. It is suitable for investors seeking long-term capital growth with minimal risk. The fund has been in existence since 2005 and is managed by Reliance Mutual Fund (RMF), one of the top mutual fund companies in India.

Investment Philosophy

The Reliance Tax Saver Fund tries to maintain a balance between large-cap and mid-cap companies, fostering potential leaders. It focuses on investing in companies with high growth prospects in the next 2-3 years.

Reliance Mutual Fund offers several convenient methods to invest in the Reliance Tax Saver Fund:

• Visit their official website at www.reliancemutual.com.
• Download and use their mobile application or SMS service.
• Fill out an application form and visit a designated investor service center.
• Call their customer care number: 1860 266 0111.
• Purchase the scheme through a stock exchange.
• Use the Reliance Any Time Money card for 24/7 accessibility and liquidity.

Investment Plans

The Reliance Tax Saver Fund offers various plans to meet different investor needs:

• Dividend Payout Option
• Annual Dividend Payout Option
• Direct Plan-Growth Plan
• Direct Plan - Dividend Plan

Special Facilities

The Reliance Tax Saver Fund also provides several special facilities for investors:

• Systematic Investment Plan (SIP): Investors can contribute a fixed amount at regular intervals instead of a lump sum, reducing the impact of market fluctuations.
• Systematic Transfer Plan (STP): Investors can transfer money regularly to other mutual fund schemes offered by RMF.
• Multiple Systematic Transfer (MST) Plan: Similar to STP, but allows transfers to multiple schemes offered by RMF.
• Free group term insurance for SIP investors: This add-on life insurance covers pending installments if the investor passes away during the SIP period.
• Reliance Salary Advantage: Employers can provide SIP facilities to their employees by deducting a set amount from their monthly salaries.
• Dividend Transfer Plan: Investors can transfer dividends earned to other schemes for investment.
• Systematic Withdrawal Plan (SWP): Investors can withdraw a minimum of Rs. 500 and multiples of Rs.100 thereafter at regular intervals.
• Flexible Asset Selection Tool (FAST): This tool offers customized investment solutions based on individual investor objectives and risk analysis.

Investment Amounts

The Reliance Tax Saver Fund has a minimum investment requirement of Rs.500, with multiples of Rs.500 thereafter. For Systematic Investment Plans (SIPs), the minimum amount is Rs.500 in the first month, with multiples of Rs.500 for the next 11 months. Alternatively, investors can choose to invest Rs.1000 in the first month and then Rs.500 multiples for at least six months.

Eligibility

The Reliance ELSS Fund is open to a wide range of investors, including adult Indian residents, parents or legal guardians investing on behalf of minors, Hindu Undivided Families (HUF), companies, financial institutions, foreign institutional investors, NRIs, retirement benefit funds, and more.

Performance and Risk

The Reliance Tax Saver Fund has provided returns of 10.80% and 15.51% over the last 3-year and 5-year periods, respectively. The scheme has outperformed its benchmark and category averages over the years, although it has also experienced periods of underperformance. The risk associated with this scheme is considered moderately high, making it suitable for investors seeking long-term capital gains.

Frequently asked questions