IDFC Tax Advantage ELSS Fund vs ICICI Prudential Long Term Equity Fund (Tax Saving)

1. IDFC Tax Advantage ELSS Fund vs ICICI Prudential Long Term Equity Fund (TaxSaving) Equity Linked Saving Schemes or ELSS are open-ended mutual funds that are eligible for tax deductions as per Section 80C of the Income Tax Act. They are emerging as the preferred choice for tax-saving instruments because of the shorter lock-in period (only three years) and potential for higher returns (compared to Provident Fund, NSC, ULIPs, etc.). These funds invest a significant chunk of the portfolio in equity and equity-related instruments. In this article, we will look at two tax-saving schemes – NAV of IDFC Tax Advantage Fund and ICICI Prudential Long Term Equity Fund to check theirperformance. FundDetails Launched in December 2008, IDFC Tax Advantage ELSS Fundhas a preference for large-cap stocks in terms of market capitalization. Half of the portfolio consists of these stocks while the balance is split between mid-cap (19.3%) and small-cap (29.83%) stocks. This fund is being managed by Mr. Daylynn Pinto since October 2016. NAV of IDFC Tax Advantage Fund was Rs. 55.18 (Growth) and Rs. 16.10 (Dividendplan) ICICI Prudential Long Term Equity Fund was launched in August 1999. The fund is managed jointly by Mr. Harish Bihani and Sankaran Naren since November 2018. Ms. Priyanka Khandelwal takes care of the overseas investment aspect. 2/3rd of the portfolio is invested in large-cap stocks while the balance is split (almost equally) between mid and small-capstocks. PortfolioComposition In terms of sector allocation, financial services lead the chart for the funds. IDFC Tax Advantage Fund allocates 29% of the corpus in banks and finance while ICICI Prudential Long Term Equity Fund invests only about 22.9% of the funds in this sector. IDFC Tax Advantage Fund is a diversified fund and spreads the overall portfolio over 22 sectors. After banks, the next highest allocation is in the Software industry. (8%). Petroleum products,Consumer

2. Products, and Construction projects cumulatively constitute 18% of the portfolio, with equal distribution amongstthemselves. ICICI Prudential Long Term Equity Fundinvests its corpus selectively in 13 sectors. The major contributors (after financial services) are Energy (14.6%), Consumer Goods (10.9%) and Metals(8.6%) Performance IDFC’s tax-saving fund was launched in 2008. Since its inception, it has generated 16.74% returns. In absolute terms, Rs. 10,000 invested in Dec 2008 would become Rs. 55,020 (compared to Rs. 52,918 if invested in benchmark funds) and the same can be confirmed from the NAV of IDFC Tax Advantage Fund. Performance metrics for this fund across multiple time-framesare: (*Benchmark – S&P BSE 200TRI) ICICI Prudential Long Term Equity Fund has generated 19.8% returns since its inception in 1999. In money terms, investment of Rs. 10,000 in the fund (at the time of launch) would have grown to Rs. 392,330. This is more than 2.5 times the growth offered by the benchmark. Performance metrics for this fund across multiple time-framesare: (*Benchmark – Nifty 500TRI) FinalWords These schemes are suitable for investors who seek capital appreciation in the long run and have an investment horizon of a minimum of five years. Both of them have outperformed their respective benchmarks (since inception metric) and are a good choice for someone looking for a higher return yielding tax saving instrument and readiness to absorb some risk. An investor’s choice for a particular fund should depend on their own financial goals and investmentobjective.