DSP ELSS Tax Saver Fund: Axing Taxes And Beating Benchmarks

When investing for the long term and that too in a product with a lock-in period, the decision between the best and the consistent performer becomes critical. While chasing the best performer might seem tempting, but a steady, consistent performer could be a more reliable option. If considering investment in a tax-saving mutual fund, such as equity-linked savings scheme (ELSS), do remember that you will be tied for three years, even if the fund underperforms. So, it is important to choose a fund that has a sound track record of consistent performance.

DSP ELSS Tax Saver Fund has proved its mettle in the past, having weathered many market storms to emerge as a seasoned performer in the tax-saving category.

Portfolio

Fund manager Rohit Singhania, who has been at the helm since 2015, follows a flexible investment style and invests across sectors and stocks without bias. He takes fair exposure in mid- and small-cap stocks when the opportunity arises, but prefers to stick to large-cap funds, irrespective of market conditions. The fund has historically maintained minimum 60 per cent exposure in large-cap funds.

At present, the fund has invested 63.46 per cent, 18.13 per cent and 15.13 per cent in large-, mid-, and small-cap stocks, respectively. In terms of investment strategy, Singhania prefers investing in scalable businesses that display high capital efficiency, but not at unreasonable valuation. The fund is quite diversified. As of November 2024, the fund has invested in 63 stocks across 22 sectors.

Performance

The fund has consistently beaten its benchmark, the Nifty 500, and peers across periods with little volatility. It has outperformed the category in both three- and five-year periods. To give you a perspective, a systematic investment plan (SIP) of Rs 5,000 per monthly has turned to Rs 5.67 lakh in the last five years. The fund has always secured its position among the top-10 funds in its category in the last one-, three-, and five-year periods.

OLM Take

Given its overall performance across periods, the fund is worth considering if you are looking to invest in a tax-saver fund this season.

kundan@outlookindia.com