Reliance Tax Saver Fund is the ELSS offering from Reliance Mutual Funds, one of the largest mutual fund AMCs, currently operating in India, for investors interested in availing tax benefits through mutual fund investments. The Reliance Tax Saver Fund has been a popular choice among various investor groups engaged in ELSS investments due to its track record, which places it solidly among the top performing ELSS funds available in India. The Reliance Tax Saver Fund is focused on providing its investors with long-term capital appreciation along with tax benefits under Section 80C of the Income Tax Act of 1961.
Tax Benefits of the Reliance Tax Saver (ELSS) Fund
Direct Plan: This scheme is available for investment through its direct plan, which is available through the Reliance Mutual Funds website as well as to offline investors visiting the AMC’s local office. Direct plans are preferred by many investors due to their lower expense ratio despite the higher NAV. This lower expense ratio is designed to provide a greater degree of capital appreciation in the long-term.
Regular Plan: The regular or retail plan of the Reliance ELSS fund is available to all investors opting for this scheme through a 3rd party brokerage. Those investing through Paisabazaar.com can also invest in this plan of the ELSS fund. The regular plan features a higher expense ratio for the fund and this decreases the NAV of the mutual fund units. All brokerage and portfolio management, etc. fees are waived in case investment in the regular scheme is made through Paisabazaar.com.
Dividend Option: The dividend option of Reliance Tax Saver Fund is available in case of both direct and regular plans. If an investor opts for the dividend option, they are entitled to receive dividends on their investments if the fund declares it. Dividend amounts are based on the number of units the investor holds and may feature either a payout option or a reinvest option. In the case of dividend payout, the accrued dividend is automatically transferred to the investor’s bank account, while in the case of the dividend reinvest, the dividend earned is automatically converted to units of equal value and added to existing number of units of the fund. The NAV of each fund unit decreases by an amount equal to the dividend declared by the scheme.
Growth Option: In the case of the growth option, no dividends are paid out to the investor, while he/she stays invested in the scheme. In case the scheme makes any significant gains, those are invested back into the scheme, which increases the NAV of the scheme. The increased NAV gives rise to capital appreciation when the investor redeems or switches from the scheme at a later date.
Reliance SIP Insure Scheme for Reliance Tax Saver Fund
The Reliance SIP Insure scheme is an innovative plan introduced by Reliance Nippon AMC to promote SIP for investments into the scheme. This is an add-on facility that provides life insurance benefit as part of the Group Term Insurance plan provided to those opting for SIP route in case of select schemes including the Reliance Tax Saver ELSS scheme.
The coverage under Reliance SIP Insure is available as a complimentary benefit and in the case of the investor’s untimely demise, the remaining SIPs will be covered automatically by the benefits available. Thus the feature provides the dual benefit of the completion of investment targets as well as compensation benefits to the nominee in case of untimely demise of the investor.
Some of the key benefits of availing the Reliance SIP Insure are:
- Free life insurance cover not exceeding Rs. 21 lakhs for each investor across various schemes/plans and folios
- Enables completion of planned investments
- Maturity proceeds allowed at applicable NAV
- Equity investments made through SIP can provide market-linked returns over the long term.
- Conveniences available include OTM mandate, Auto Debit from various banks and ECS facility at multiple locations across India.
Eligible investors for the SIP Insure Scheme include:
- Individual investors who invest in Reliance Tax Saver scheme through SIP and opt for the SIP Insure feature.
- Individual investor needs to be aged over 18 years and 51 years when investment is being considered.
In case a specific scheme is held jointly, the primary scheme holder will receive the SIP Insure benefit.
Top Holdings of the Reliance Tax Saver (ELSS) Fund
|Investment Sector||Top Holdings|
|Banking/Finance||State Bank of India, ICICI Bank, Axis Bank, Bank of Baroda, HDFC Bank, Yes Bank, Canara Bank, Reliance Capital Limited, etc.|
|Automobiles/Auto Ancillaries||TVS Motor Company, Federal-Mogul Goetze (India), Sundaram Clayton, Wheels India, etc.|
|Consumer Non-durables||ITC Limited, Jubilant Foodworks, etc.|
|Ferrous Metals||Tata Steel, Indian Metals, and Ferro Alloys, etc.|
|Industrial Capital Goods||Honeywell Automation India, ABB India, Siemens, BEML, GE T&D India, etc.|
|Industrial Products||Vesuvius India, KSB Pumps, Bharat Forge, etc.|
|Software||Infosys Limited, HCL Technologies Limited, etc.|
|Miscellaneous||Ramco Cements, The Indian Hotels Company, UPL Limited, Aurobindo Pharma, Trent Limited, Jet Airways, HDFC, etc.|
The above list is illustrative and the investments are liable to change as per prevailing market conditions and fund objectives.
Investment Objective of Reliance Tax Saver Fund
The investment objective of Reliance Tax Saver (ELSS) Fund is to generate long-term capital growth for the investors of the scheme. This growth is expected to be generated through investments made in various equity investments as well as equity-related schemes, which feature a high potential for long-term growth along with a relatively high level of risk. Apart from equities, which would comprise a major portion of the Reliance Tax Saver Fund’s portfolio, a smaller portion may be invested in debt and money market instruments in order to balance the inherent risk of the scheme.
Investment Strategy Overview of Reliance Tax Saver Fund
Being a tax saver fund designed to offer long-term capital appreciation to the investor, the following are some key features of the investment strategy implemented by the Reliance AMC for its ELSS Tax Saver Fund:
- The fund would seek to ensure a balance between large cap and mid cap investments for the scheme.
- The investments of Reliance Tax Saver (ELSS) Fund would attempt investments in potential leaders such as companies featuring high growth prospects in the short to medium term (2 to 3 years).
- The scheme is expected to have 2 or 3 sector calls at any given time, which would be made keeping in mind current and emerging market trends.
- A relatively small portion of the portfolio may be invested in contrarian calls depending upon changing market conditions.
- A major portion of the equity investments available in the Reliance Tax Saver Scheme would be made in mid-cap companies that are expected to witness robust growth in the coming years.
- A key portion of the equity exposure in case of the Reliance Tax Saver (ELSS) Fund would include shares of key Multinational Companies listed on Indian stock markets.
- The scheme is also expected to feature a balanced portfolio in case of the overall macro considerations including balanced exposure to key themes such as defensive, consumptive and domestic.
Risk Profile of Reliance Tax Saver (ELSS) Fund
The Reliance Tax Saver Fund features a high degree of exposure to equities and various equity-related instruments including, which apart from being potentially high growth investment options, also feature a high degree of risk. As a result of the high risk associated with equity-related schemes, the risk level of the Reliance Tax Saver (ELSS) Fund is classified as moderately high. This implies that there is some degree of risk to the principal being invested in the scheme.
Reliance Tax Saver (ELSS) Fund Information and Statistics
Launch Date: The Reliance ELSS fund was officially launched and available for investment from the 21st of September 2005 onwards.
Fund Type: This tax saver scheme is an open-ended ELSS with a lock-in period of 3 years. No switching or redemption is allowed during the lock-in period of the scheme. The principal invested is eligible for tax benefits under Section 80C of the Income Tax Act 1961.
Minimum Investment: The minimum lump sum investment allowed in this ELSS scheme is Rs. 500, further investments of larger amounts are allowed as multiples of Rs. 500 thereafter. In the case of systematic investment plan (SIP) investments, the minimum size of each SIP investment is Rs. 500 for a period of at least 12 months. Higher amount SIPs in multiples of Rs. 500 often feature a shorter minimum investment period.
Risk Category: This ELSS is classified as a moderately high-risk investment with risk to the principal amount invested as well. The key reason for this risk label is the fact that the scheme has significant exposure to equity investments.
Entry/ Exit Load: As per SEBI mandate, the entry load for this scheme is nil. Additionally, being a tax saver mutual fund investment with the EEE label, the exit load subsequent to the lock-in period of 3 years is zero as well. No redemption or switching in this scheme is allowed during the lock-in phase of the scheme.
Fund Manager: Mr. Ashwani Kumar currently serves as the manager for the Reliance Tax Saver Fund. He is currently a senior equity manager with Reliance Capital Asset Management Limited. Prior to joining Reliance AMC, Mr. Kumar worked as a Senior Research Analyst at Zurich Asset Management Co. India where he was responsible for tracking engineering, metals and automotive sectors. Mr. Kumar is a BSc. Graduate with a Management degree in Finance from IIM, Bangalore.
About ELSS Mutual Funds
ELSS or Equity Linked Savings Scheme are a unique set of mutual funds that mainly invest in equities and equity-based instruments, while also providing tax deduction benefits under Section 80C of the IT Act, 1961. ELSS mutual funds are in fact among a small group of tax-saving investments that are classified as EET (i.e. Exempt, Exempt, Taxable) investments and it has the short lock-in period of 3 years. This implies that the principal invested in ELSS, the capital gains earned as well as the maturity amount of the investment are all exempt from tax. Additionally, any dividends earned from ELSS fund investments are also exempt from tax. The maximum annual tax exemption allowed in case of ELSS is capped at Rs. 1.5 lakhs, however, higher amounts may be invested in an ELSS tax saver scheme without availing tax benefits.
How to Invest in Reliance Tax Saver Fund through Paisabazaar.com
Paisabazaar.com features a very simple and powerful mutual fund platform that allows investors to invest in the Reliance Tax Saver (ELSS) Fund without having to pay fees such as those for portfolio management and/or brokerage charges. All the investor needs are to log on to the mutual fund platform of Paisabazaar.com and search for the Reliance Tax Saver (ELSS) Fund under the tax planning heading. On subsequent pages inputs such as total investment amount, investment procedure (lump sum or SIP), options – growth or dividend, etc. will have to be input. Once these details have been completed, the investor can choose to make the payment through Net banking or set up an ECS mandate to invest in the scheme. The entire investment process takes only a few minutes and can be completed online from the comfort of the investor’s home/office.
Best Tax Saver Mutual Fund Schemes
|Best ELSS Funds for Tax Saving|
|ICICI Prudential Long Term Equity Fund|
|Motilal Oswal Long Term Equity Fund|
|Axis Long Term Equity Fund|
|SBI Magnum Tax Gain|
|Aditya Birla Sun Life Tax Relief 96|