Top 5 ELSS Funds with High Returns and Tax Benefits in 2025

Are you looking for the perfect investment opportunity to save taxes while securing high returns? Equity Linked Savings Schemes (ELSS) are the go-to option for many investors in India, offering both wealth creation and tax-saving benefits. In this post, we’ll dive into the top 5 ELSS funds in 2025 that have consistently delivered strong performance while aligning with the latest financial trends.

Equity Linked Savings Schemes (ELSS) are mutual funds that offer tax benefits under Section 80C of the Income Tax Act, along with the potential for significant returns by investing primarily in equities. With a mandatory lock-in period of three years, ELSS funds are an attractive option for investors seeking both tax savings and wealth creation.

What are ELSS Funds?

Equity Linked Savings Schemes (ELSS) are mutual funds with the dual benefit of tax savings under Section 80C of the Income Tax Act and potential for high returns by investing primarily in equity markets. With a lock-in period of three years, ELSS funds are a smart choice for both beginner and seasoned investors.

Why Choose ELSS Funds for 2025?

1. Tax Savings: Reduce your taxable income by up to ₹1.5 lakh.
2. Short Lock-in Period: Only 3 years, compared to 5 years or more for other tax-saving options like FD.
3. Wealth Creation: Benefit from equity market growth potential.
4. Diversification: Access a professionally managed, diversified portfolio.

Top 5 ELSS Funds with High Returns and Tax Benefits in 2025

1 – Motilal Oswal ELSS Tax Saver Fund

This fund has demonstrated strong performance with a 3-year annualized return of 27.51% and a 5-year annualized return of 24.39%. It has a net asset value of ₹4,186.93 crore and an expense ratio of 1.83%.

• 3-Year Annualized Return: 27.51%
• 5-Year Annualized Return: 24.39%
• Net Asset Value (NAV): ₹4,186.93 crore
• Expense Ratio: 1.83%

2 – SBI Long Term Equity Fund

With a net asset value of ₹27,847.49 crore, this fund offers a 3-year annualized return of 24.11% and a 5-year annualized return of 24.31%. The expense ratio stands at 1.59%.

• 3-Year Annualized Return: 24.11%
• 5-Year Annualized Return: 24.31%
• Net Asset Value (NAV): ₹27,847.49 crore
• Expense Ratio: 1.59%

3 – HDFC ELSS Tax Saver Fund

This fund has a net asset value of ₹15,945.04 crore, providing a 3-year annualized return of 21.42% and a 5-year annualized return of 20.60%. The expense ratio is 1.7%.

• 3-Year Annualized Return: 21.42%
• 5-Year Annualized Return: 20.60%
• Net Asset Value (NAV): ₹15,945.04 crore
• Expense Ratio: 1.7%

4 – DSP ELSS Tax Saver Fund

With a net asset value of ₹16,835.11 crore, this fund offers a 3-year annualized return of 19.06% and a 5-year annualized return of 21.24%. The expense ratio is 1.64%.

• 3-Year Annualized Return: 19.06%
• 5-Year Annualized Return: 21.24%
• Net Asset Value (NAV): ₹16,835.11 crore
• Expense Ratio: 1.64%

5 – Bank of India ELSS Tax Saver Fund

This fund has a net asset value of ₹1,453.01 crore, providing a 3-year annualized return of 17.60% and a 5-year annualized return of 24.75%. The expense ratio stands at 2.08%.

• 3-Year Annualized Return: 17.60%
• 5-Year Annualized Return: 24.75%
• Net Asset Value (NAV): ₹1,453.01 crore
• Expense Ratio: 2.08%

Disclaimer: Mutual fund investments are subject to market risks. Read all scheme-related documents carefully before investing.

Note: Past performance is not indicative of future results. Consult a financial advisor to align investments with your financial goals.

Key Considerations When Investing in ELSS Funds:

• Tax Benefits: Investments up to ₹1.5 lakh in ELSS funds are eligible for tax deductions under Section 80C.
• Lock-in Period: ELSS funds have a mandatory lock-in period of three years, which is the shortest among tax-saving instruments.
• Expense Ratio: A lower expense ratio can enhance net returns over time.
• Fund Performance: While past performance does not guarantee future results, it provides insight into the fund’s consistency and management effectiveness.
• Risk Assessment: As ELSS funds invest primarily in equities, they are subject to market risks. Investors should assess their risk tolerance before investing.

Tips for Choosing the Right ELSS Fund:

1. Evaluate Past Performance: Look for funds with consistent returns over 3-5 years.
2. Consider Expense Ratios: Lower ratios mean higher net returns.
3. Match Risk Appetite: Choose funds that align with your investment goals and risk tolerance.
4. Research Fund Managers: A skilled manager can make a significant difference.

Conclusion:

ELSS funds offer a compelling combination of tax benefits and potential for high returns. The funds listed above have demonstrated strong performance metrics, making them worthy considerations for your investment portfolio in 2025. However, it’s essential to align your investment choices with your financial goals and risk tolerance. Consulting with a financial advisor can provide personalized guidance tailored to your specific needs.

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