Axis ELSS Tax Saver Fund A Personal Journey to Smart Investing

 

Note: Axis Mutual Fund is to change the name of Axis Long Term Equity Fund to Axis ELSS Tax Saver Fund, with effect from December 08, 2023

Investing can feel overwhelming, especially when trying to find the right mutual fund to align with your financial goals. One name that frequently comes up in conversations about tax-saving and long-term growth is the Axis ELSS Tax Saver Fund. Let’s dive into what makes this fund a popular choice and how you and I can benefit from it.

What is Axis ELSS Tax Saver Fund?

The Axis ELSS Tax Saver Fund is an Equity Linked Savings Scheme (ELSS) designed to offer tax benefits while aiming for long-term capital appreciation. This fund primarily invests in equity and equity-related securities, giving you a chance to participate in the stock market’s growth.

Types of Plans:

• Axis ELSS Tax Saver Fund Direct Growth: Perfect for those of us who prefer investing directly without any intermediaries.

• Axis ELSS Tax Saver Fund Regular Growth: This plan involves intermediaries, and the returns might be slightly lower due to commission fees.

Benefits of Investing in Axis ELSS Tax Saver Fund

Investing in this fund comes with a host of benefits, particularly when it comes to tax savings and potential returns.

Tax Benefits (ELSS): One standout feature of this fund is its eligibility for tax deductions under Section 80C of the Income Tax Act. You and I can claim deductions up to Rs 1.5 lakh per financial year, making it a smart choice for tax-savvy investors.

Long-term Capital Gains: By investing in this fund, we set ourselves up for potential long-term capital gains. These gains are taxed at a lower rate compared to short-term gains, adding another layer of financial efficiency to our investment.

Understanding NAV (Net Asset Value)

Current NAV and Historical Performance: The NAV of Axis ELSS Tax Saver Fund is a critical metric that reflects the per-unit price of the fund. Keeping an eye on the NAV helps us gauge the fund’s performance over time.

Importance of NAV in Mutual Fund Investment: NAV helps determine the entry and exit points in the fund. It’s essential to understand how NAV impacts our investment’s value, especially when comparing historical data to current performance.

Axis ELSS Tax Saver Fund Plans

Direct Growth Plan: Ideal for those of us who prefer a hands-on approach to investing. This plan typically offers higher returns as there are no intermediary commissions involved.

Regular Growth Plan: Suitable for investors who value professional advice and prefer to invest through financial advisors or brokers. The returns may be slightly lower due to the commission fees.

Lock-in Period and Tax Benefits

Explanation of the Lock-in Period: The Axis ELSS Tax Saver Fund has a mandatory lock-in period of 3 years. During this time, we cannot withdraw our investment, but it ensures that our money remains invested long enough to potentially yield higher returns.

Tax-saving Advantages: Investments in this fund qualify for tax deductions under Section 80C, up to Rs 1.5 lakh per financial year. This not only reduces our taxable income but also allows our investment to grow tax-free during the lock-in period.

Performance and Returns

Historical Returns: The fund has consistently delivered impressive returns over the years, often outperforming other ELSS funds and benchmark indices.

Comparison with Other ELSS Funds: While other ELSS funds also offer tax benefits, Axis ELSS Tax Saver Fund stands out due to its robust performance and consistent returns.

Fund Management

Role of the Fund Manager: The success of any mutual fund heavily depends on its fund manager. Shreyash Devalkar, the fund manager for Axis ELSS Tax Saver Fund, brings a wealth of experience and strategic insight to the table.

Strategies and Objectives: The fund’s strategy focuses on investing in high-quality businesses with sustainable growth potential. The objective is to achieve long-term capital appreciation by leveraging opportunities in the equity market.

Investment Strategy

Asset Allocation: The fund primarily invests in equity and equity-related securities, maintaining a diversified portfolio to mitigate risks.

Equity-related Securities: By focusing on equity-related securities, the fund aims to capture market growth and deliver substantial returns to us, the investors.

Expense Ratio and Its Impact

Explanation of Expense Ratio: The expense ratio represents the annual fees charged by the fund to manage our investment. This includes management fees, administrative costs, and other operational expenses.

How it Affects Returns: A lower expense ratio means more of our money is working for us, translating to higher potential returns. The Axis ELSS Tax Saver Fund is known for its competitive expense ratio, making it an attractive option for cost-conscious investors.

Risks Associated with Axis ELSS Tax Saver Fund

Market Risks: Like any equity investment, this fund is subject to market risks. The value of our investment can fluctuate based on market conditions.

Poor Risk-adjusted Returns: While the fund aims for high returns, it’s essential to consider the risk-adjusted performance. This metric helps us understand the returns relative to the risk taken.

How to Invest in Axis ELSS Tax Saver Fund

Step-by-step Guide:

1. Choose your plan: Decide between the Direct Growth and Regular Growth plans.

2. Complete KYC: Ensure our KYC (Know Your Customer) process is completed.

3. Select investment mode: Opt for a lump sum investment or set up a SIP (Systematic Investment Plan).

4. Monitor performance: Regularly track our investment to stay informed about its performance.

Important Considerations: Always consider our financial goals, risk tolerance, and investment horizon before investing.

Who Should Invest?

Ideal Investor Profile: This fund is suitable for individuals looking for tax-saving investment options with the potential for long-term capital appreciation.

Long-term Investment Goals: Investors with a horizon of at least 3-5 years, who can stay invested during the lock-in period, will benefit the most.

Comparing Axis ELSS Tax Saver Fund with Other ELSS Funds

Key Differences: Compared to other ELSS funds, the Axis ELSS Tax Saver Fund has shown strong performance metrics and robust fund management.

Pros and Cons: While the fund offers significant tax benefits and potential returns, it also comes with market risks and a lock-in period.

Conclusion

Investing in the Axis ELSS Tax Saver Fund can be a smart move for those of us looking to save on taxes while aiming for long-term growth. With a well-defined investment strategy, experienced fund management, and a track record of strong performance, this fund stands out as a reliable option for both new and seasoned investors.

FAQs

1. What is the lock-in period for Axis ELSS Tax Saver Fund?

   • The lock-in period for this fund is 3 years, during which we cannot withdraw our investment.

2. How does Axis ELSS Tax Saver Fund save taxes?

   • Investments in this fund qualify for tax deductions under Section 80C, up to Rs 1.5 lakh per financial year.

3. What are the risks involved in investing in this fund?

   • The primary risks include market volatility and poor risk-adjusted returns, which can affect the value of our investment.

4. How can I track the performance of my investment?

   • We can track the performance through the fund’s official website, financial news portals, and regular statements provided by the fund house.

5. Is Axis ELSS Tax Saver Fund suitable for first-time investors?

   • Yes, it’s suitable for first-time investors who are looking for tax-saving options with the potential for long-term growth.