Should I stop investing in Reliance Tax Saver (ELSS) Fund?

I have been investing in Reliance Tax Saver (ELSS) Fund for the last one and a half years. However, the scheme has not been performing well. Should I stop investing? If yes, suggest an alternative fund.
--Subham Sahoo

Prableen Bajpai, Founder & Managing Partner, Finfix Research & Analytics, responds:

You must be aware that Reliance Tax Saver (ELSS) Fund is now Nippon India Tax Saver (ELSS) Fund. The scheme has invested around 40 per cent in small and mid cap segments - a space that has been beaten down badly during the period you have mentioned in your query.

While the fund has been an underperformer vis-à-vis its peers, it would be harsh to judge the performance of a fund during such market conditions and make a decision to exit. Remember, the money committed to the fund cannot be redeemed since each SIP is locked for a period of three years.


Investors pick tax-saver funds to avail the tax deduction of up to Rs 1.5 lakh under section 80C of the income tax act. ELSS funds also have a mandatory lock-in period of three years. However, you should not be guided by this mandatory time period since any money allocated to any equity fund should be kept for a minimum of five years.