Nippon India ELSS Tax Saver Fund Review – Performance, Benefits & Tax Savings

Nippon India ELSS Tax Saver Fund is one of the equity mutual fund schemes that were launched by Nippon Indian Mutual Fund. It is an open-ended equity linked scheme which comes with a 3-year statutory lock-in period, and tax benefits.

 

The primary objective of the Nippon India ELSS Tax Saver Fund scheme is generation of capital appreciation in the long term from a portfolio which is predominantly invested in equity and equity-related instruments. However, if you are interested in investing in mutual funds, you must also remember that there cannot be any assurance that a scheme would surely be achieving its objective. Nippon India ELSS Tax Saver Fund is, in fact, a scheme that comes with very high risks.

 

Nippon India ELSS Tax Saver Fund particularly operates under the Direct Growth plan, meaning you as an investor bypass intermediaries such as brokers, and rather directly invest with the fund house. The Growth option, in addition to that, is to ensure that the returns are being reinvested into the fund instead of being distributed as dividends. With time, this helps maximum wealth creation, thereby helping you reach your long term financial goals.

If you are looking for long term capital growth as an investor, and want to be investing in equity and equity-related securities, then Nippon India ELSS Tax Saver Fund could be a good option for you. However, please remember that it is always a good idea to consult your financial advisors if you have any doubts whatsoever regarding whether or not the scheme is suitable for you.
 

Additionally, if you are planning to invest in Nippon India ELSS Tax Saver Fund, you must be aware that your principal would be at a very high risk, and so will be the benchmark.

• Like any other ELSS fund, Nippon India ELSS Tax Saver Fund offers dual benefits.
• You get to enjoy investment growth via equity exposure, and tax savings under Section 80C of the Income Tax Act.
• The fund manager, while picking the stocks, sticks to companies that have a strong growth potential and are trading at a substantial discount to their intrinsic values.

Nippon India ELSS Tax Saver Fund follows a mix of growth and value investing, thereby seeking to invest in sectors that are expected to be performing well over a long period of time. With the government having passed certain reforms, the domestic-oriented sectors including Industrials, Financials, and Consumer Discretionary account for nearly two-thirds of the fund’s portfolio. On the other hand, export-oriented sectors like Information Technology or Healthcare account for the least.
 

The fund manager balances out both the growth as well as the valuation aspects while investing. With an approach of fundamental valuation at the core of the investments, the companies that are part of the portfolio are such that they stand at the start of their earnings growth cycle, and thus resulting in an attractive forward-looking cash flow metric and prospective earnings.
 

Nippon India ELSS Tax Saver Fund tends to be driven by the cyclicality in the market. It also outperforms in a significant manner in the mid-cap rally because of the exposure it has in this segment with a moderately high portfolio beta. However, as there is also a sizable allocation that comes in from the large-cap segment, the fund manager has to ensure that the fund is not reacting adversely to times wherein the market performs gets subdued and a significant share of returns are being generated because of bottom-up stock selection.

Although most of the funds in the ELSS category tend to follow a multi-cap approach, when we look at Nippon India ELSS Tax Saver Fund, it specifically focuses more on mid and small-cap spaces, thereby gaining returns over a long term horizon.
 

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