Comparison of ELSS Mutual Funds: SBI Long Term Equity Fund vs. Parag Parikh Tax Saver Fund

[pawansharma]

Introduction

ELSS (Equity Linked Savings Scheme) mutual funds are popular among investors seeking tax benefits while aiming for long-term capital appreciation. In this discussion, we'll delve into the specifics of two prominent ELSS funds: the SBI Long Term Equity Fund and the Parag Parikh Tax Saver Fund.

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SBI Long Term Equity Fund

The SBI Long Term Equity Fund is a flagship offering from SBI Mutual Fund, known for its consistent performance and investor-friendly approach. It falls under the ELSS category, offering tax benefits under Section 80C of the Income Tax Act.

Key Features and Investment Strategy:

• Objective: The fund aims for long-term capital growth primarily through equity investments in diversified sectors.
• Portfolio Composition: It maintains a diversified portfolio across market caps and sectors, focusing on fundamentally strong companies with growth potential.
• Risk Management: The fund adopts a blend of growth and value investing strategies, aiming to manage risk while maximizing returns.
• Tax Benefits: Investors can avail tax deductions of up to Rs. 1.5 lakh under Section 80C of the Income Tax Act.

Performance Analysis:

• Historical Returns: The fund has delivered competitive returns over various time horizons, outperforming benchmarks and peers in many instances.
• Risk-adjusted Returns: It has demonstrated resilience during market downturns, showcasing effective risk management.

Parag Parikh Tax Saver Fund

The Parag Parikh Tax Saver Fund is managed by Parag Parikh Mutual Fund and is well-regarded for its distinct investment philosophy and disciplined approach.

Key Features and Investment Strategy:

• Objective: The fund seeks long-term capital appreciation by investing in a diversified portfolio of equities, including international stocks.
• Global Exposure: It offers exposure to global markets, providing investors with opportunities beyond domestic equities.
• Portfolio Composition: The fund's portfolio is constructed with a focus on quality companies with sustainable business models and growth potential.
• Risk Management: It employs a bottom-up stock selection approach, emphasizing fundamental analysis and risk mitigation.

Performance Analysis:

• Global Diversification: The fund's international exposure has contributed to its performance, especially during periods of rupee depreciation.
• Risk-adjusted Returns: It has demonstrated resilience in volatile markets, showcasing the benefits of its diversified approach.