57% ELSS funds underperformed their benchmarks in three-year horizon

economictimes.indiatimes.com:

mutual funds failed to beat their respective benchmarks in the last three years. The three-year performance is significant because ELSS funds come with a mandatory lock-in period of three years. Most investors take a call on whether to continue with their schemes based on their performance during the lock-in period. ELSSs or equity linked saving schemes help investors to save taxes under Section 80C of the Income Tax Act. Investors can save a maximum of Rs 1.5 lakh in a financial year by investing in these schemes. The category manages assets worth Rs 1.71 lakh crore. The category has lost some of its popularity after the government introduced the new income tax regime that doesn’t need mandatory investments like ELSS to save taxes. An ETMutualFunds study showed that around 57% ELSS funds failed to beat their respective benchmarks in the three-year horizon. We analyzed the performance of around 37 ELSS schemes that have completed three years in the market and found out that 21 schemes failed to beat their respective benchmarks. In other words, only 16 schemes could beat their benchmarks.

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ETMutualFunds looked at trailing returns in three years to see whether the performance of the schemes or the underperformance against their benchmarks. Don’t be disheartened because your scheme failed to beat its benchmark. All the schemes in the category offered double-digit returns in the three-year period. The ELSS category offered an average return of 23.67% in the three-year horizon. The ELSS schemes are benchmarked against NIFTY 500 — TRI, S&P BSE 100 — TRI, and S&P BSE 500 — TRI. These benchmarks offered around 23.14 — 24.88%