Finance

How To Analyze The Performance Of ELSS Funds

A potential sign of a wise man is one who not just earns but also saves a substantial amount of his earnings. One of the best ways of saving is investing in good and correct schemes. The ELSS schemes are a great idea of such investment. These ELSS funds are a great way through which you can save a tax amount of Rs. 1.5 lakhs. This exemption can be executed under the Section 80C under Income Tax Act.

Ascertain ELSS Funds

These ELSS funds are also known as the tax saving mutual funds. These Equity Linked Saving Schemes are a popular choice of tax saving options. They are opted for by a large number of people. However, in order to attain the maximum benefits from them, it is mandatory that you do keep a proper track of their growth and dynamism. These mutual funds have a lock period which is quite mandatory in its nature. It generally comes to around a span of three years. This is a period when you cannot sell away the mutual funds. This is the period when you can analyze their performance.

The performance of the mutual funds or ELSS funds cannot be ascertained from the single aspect of their performance alone. The performance and its indicative growth or stagnation can be best depicted and explained with a comparison to the benchmark and the category of the scheme. If the performance is able to surpass the benchmark, then the growth can be said to be a dynamic one.

However, if there is a depletion in the limit, it could mean a stagnation in development. This, however, does not mean that there is any reason to worry. This performance must be observed for while. Take a note of the growth or decline as it occurs. If the decline is for a short period then there is nothing to be worried and concerned about the whole thing. However, this occurs for a long time such as a whole year or even more than that. Then a closer analysis of the performance must be done.

Things To Do To Analyze ELSS Funds

The following things must be done so that a proper analysis of the performance of ELSS funds can be done.

  • The finer aspects of investments done in the particular scheme must be done.
  • You must also read the facts and figures about the fund in the various sources of the media.
  • The interviews with the fund managers can also give us valuable information about the scheme.
  • Keep a sharp eye for facts and figures such as the Sharpe Ratio, Standard deviation and other formulas for a better understanding of the performance of the funds.

The best thing to do is selling of the funds if you are not happy with its performance. It will be better to invest your money in a different schema for better returns.

Mutual funds such as the ELSS funds are quite technical elements and one must have a good amount of knowledge about the whole thing for better returns. Take the advice of an expert for better results.