HDFC ELSS Tax Saver fund has exceeded benchmark returns since inception: Should you invest

Since its inception, HDFC ELSS Tax Saver has achieved a return of 15.49%, exceeding the benchmark's 14.99%.

Notably, the fund consistently outperformed additional benchmark returns across all timeframes too, highlighting its ability to generate alpha and exceed market expectations.

For perspective, these returns mean that an investment of ₹10,000 in the HDFC ELSS Tax Saver scheme would have grown to ₹14,585.77 in one year.

On the other hand, the same would have grown to ₹20,096.15 over three years.

Since the inception of the scheme, an initial investment of ₹10,000 would have grown to ₹49,942.74. The benchmark investment would have grown to ₹47,574.64 over the same period.

As per HDFC Mutual Fund's press release, investing ₹10,000 in HDFC ELSS Tax saver via Systematic Investment Plan (SIP) mode from March 31, 1996 (the inception date), would have grown to around ₹28 lakh as of February 29, 2024, at a compounded annual growth rate (CAGR) of 22.50%.

This is an open-ended equity-linked savings scheme with a statutory lock-in of three years and tax benefits.

The scheme provides individuals/HUFs a deduction from gross total income for investments in Equity-Linked Savings Scheme up to ₹1.5 lakh under section 80C of the Income Tax Act 1961.

The fund invests 80-100% of its portfolio in equity or equity related instruments.

While ELSS funds typically come with a mandatory 3-year lock-in period, financial experts advocate for investing beyond this timeframe to fully leverage the potential benefits of long-term wealth accumulation.

The fund's asset under management (AUM) as of February 29, 2024 is ₹13,820.09 crore.

The fund is managed by Roshni Jain and Dhruv Muchhal.

Roshi Jain, Senior Fund Manager, and Navneet Munot, MD & CEO of HDFC AMC, call HDFC ELSS Tax Saver a sound investment choice.

Jain highlighted the fund's disciplined equity investing approach and long-term value delivery.

Munot further emphasised the benefits of tax-saving and portfolio diversification.

However, as with any investment in equity-linked schemes, there are inherent market risks that could affect the performance of the fund. Market volatility, economic downturns, and unforeseen geopolitical events can all impact investment returns.

Additionally, investors should consider the specific risk profile of the HDFC ELSS Tax Saver fund.

As described by HDFC AMC, the fund carries a "Very High Risk" rating, indicating the potential for significant fluctuations in value. This risk level may not be suitable for all investors, particularly those with a lower tolerance for volatility or those nearing retirement age.

Furthermore, while the fund's impressive track record over nearly three decades is certainly noteworthy, past performance is not indicative of future results.

Market conditions and investment strategies can change over time, potentially altering the fund's performance trajectory.