Early demand for ELSS surprises mutual fund advisors

January to March is traditionally known as tax saving season. However, mutual fund investors are all set to change that notion. According to several mutual fund advisors, investors have already started investing in Equity Linked Savings Schemes (ELSSs) or tax saving/planning mutual fund schemes this financial year.
Investments in ELSS qualify for a tax deduction of up to Rs 1.5 lakh under Section 80C of the Income Tax Act.

Mutual fund advisors say there is a big positive change in the investor behaviour since the last year. “We had to actually call all our investors and ask them multiple times to start investing in ELSS for tax saving, but things have changed,” says Pankaj Gera, a Certified Financial Planner (CFP).


Earlier, many investors used to finalise their tax-saving investments during the last three months of the financial year and many a times used to make wrong decisions in their hurry.

Nisreen Mamaji, CEO, MoneyWorks Financial Advisors, says that the awareness campaigns like ‘mutual fund sahi hai’ by AMFI and several other campaigns by AMCs have been a great push to mutual fund investing. “Awareness campaigns have helped a lot in attracting investors towards products like ELSS. Now, we don’t have to start from ABC when we speak to new investors about ELSS. There already is a base from where we can take off,” says Nisreen Mamaji.

According to mutual fund advisors, the excellent performance by the stock market is also attracting some of these investors towards ELSS. “The ELSS category gave an exceptional 23 per cent return in the last one year which is huge in comparison to other tax saving instruments. These numbers are also luring many investors to invest in ELSS,” says Pankaj Gera.

Nisreen Mamaji, also says that the young investors are getting a lot of information related to mutual funds via social media. “It is very easy for the new generation to invest or get the information. For a new investor who wants to start investing in equity mutual funds, having a tax benefit is an added advantage. So, ELSS is getting more attention,” says Nisreen Mamaji.

Mutual fund advisors believe that the investor behaviour is changing for good but also have a couple of advises for the investors. Nisreen Mamaji asks the investors to link their ELSS investments to a long-term goal and not pull the money out after three years. Pankaj Gera asks the investors to have realistic return expectations and not to expect the market to continue the way it is going.