61% ELSS SIPs fail to beat benchmarks in 5 years; 3 schemes underperform by over 5% points

Mutual fund advisors typically ask investors to start investing every month via SIP or systematic investment plan in tax saving schemes or ELSS funds to save taxes under Section 80C of the Income Tax Act. An ETMutualFunds study revealed that most SIP investments failed to offer benchmark returns in five years. Three ELSS funds underperformed their benchmarks by over 5 percentage points. Only 13 schemes out of total 33 schemes offered extra returns over their benchmarks.

Around 61% ELSS funds or tax saving schemes have failed to beat their respective benchmarks in five years, an analysis of returns showed. ETMutualFunds analysed SIP returns of 33 ELSS schemes that have completed five years in the market.

Around 20 schemes out of the total 33 schemes underperformed their respective benchmarks in the five-year horizon. The ELSS category has offered an average return of 15.82% in the five-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 16.32%, 14.97%, and 16.48% respectively in the same time period.

Three ELSS funds — Aditya Birla Sun Life ELSS Tax Relief 96, Axis Long Term Equity Fund, and Groww ELSS Tax Saver Fund — underperformed their benchmarks by over 5 percentage points. Aditya Birla Sun Life ELSS Tax Relief 96 Fund and Axis Long Term Equity Fund are seasoned schemes but Groww ELSS Tax Saver Fund was taken over by Groww Mutual Fund in 2023 from Indiabulls Mutual Fund.

Axis Long Term Equity Fund, the largest scheme in the category, offered 9.92% in five years, compared to 16.32% returns offered by the benchmark (NIFTY 500 - TRI). The scheme manages assets worth Rs 31,886.84 crore.


Aditya Birla Sun Life ELSS Tax Relief 96, one of the largest scheme in the category, gave 8.15% in a five year horizon. The scheme is benchmarked against NIFTY 500 - TRI, which offered 16.32%.

ICICI Prudential ELSS Tax Saver Fund that manages assets of more than Rs 10,000 crore also failed to beat its benchmark. The scheme offered 15.35% against 16.32% by the benchmark (NIFTY 500 - TRI).

Groww ELSS Tax Saver Fund, the smallest scheme in the category, offered 11.26% and failed to beat its benchmark. The scheme is benchmarked against S&P BSE 500 - TRI, which offered 16.48% during the same time period.

Outperformers in the category

Out of the total 33 schemes in the category, 13 schemes managed to outperform their respective benchmarks. SBI Long Term Equity Fund, a scheme that manages assets of more than Rs 15,000 crore, outperformed the benchmark by over three percentage points. The scheme gave 19.89% against 16.48% by the benchmark (S&P BSE 500 - TRI).

The schemes from some of the prominent fund houses such as Franklin Mutual Fund, Mirae Asset Mutual Fund, HDFC Mutual Fund, Motilal Oswal Mutual Fund, Quant Mutual Fund, Kotak Mutual Fund managed to outperform their respective benchmarks during the same time period.

JM ELSS Tax Saver Fund, a scheme that manages assets of less than Rs 100 crore, managed to beat its benchmark. The scheme offered 17.44% against 16.48% by the benchmark (S&P BSE 500 - TRI).


ELSS or tax saving schemes help investors to save income tax under Section 80C of the IT Act. One can invest a maximum of Rs 1.5 lakh in a financial year and claim deductions on investments in a financial year. ELSS funds invest in stocks and carry high risk. These schemes have a mandatory lock-in period of three years. This helps investors, especially new and inexperienced ones, to learn about the nature of equity markets and the volatility associated with it.

Note, the above exercise is not a recommendation. This exercise was just to find out whether ELSS schemes managed to beat their benchmarks in the five-year horizon on SIP investments.

One should make an investment/redemption decision based on the above exercise. Historical returns of any scheme do not guarantee future performance.

If you are looking for recommendations; see :
Best tax saving mutual funds or ELSS to invest in 2023