DSP Tax Saver Fund is an ELSS equity fund and has generated 10.14 percent annualized returns over a 3-year cycle. DSP Investment Managers Private Limited manages the fund. The name of the fund managers is Rohit Singhania.

DSP Tax Saver fund is one of the few top funds in ELSS. Since its launch in January 2007, the fund has received an annual return of 13 per cent. It has a diverse portfolio. The fund follows a flexible investment strategy, with no sectoral bias. The fund has a portfolio of 69 stocks for investors who are looking for a diversified portfolio with tax-saving benefits, the fund for you.

If you want to invest for tax-saving purposes and are new to equity funds, large-cap funds such as DSP tax saver will suit your needs. The ability to contain well while being fully invested in equities at all times and better returns for relatively low risk are the characteristics that make this fund a stable initial tax-saving fund.

The fund has no market cap restrictions. It offers a well-diversified equity portfolio with a cohesive mix of large-cap, mid-cap, and small-cap companies. The fund’s portfolio currently tends to be large-cap. The fund has given an average annual return of 15.6 per cent in the last three years. This is about five percentage points more than the ELSS category over the Nifty 500 benchmark and nearly three percentage points higher.

Risk

The measurement of the risk of mutual funds is a bit technical. It is risky if the fund fluctuates more than the benchmark index. If the Nifty falls 5% and the fund falls 10%, the fund is risky. DSP Tax Saver Fund is a bit risky among the top 5 ELSS. Yet so far, it has given the highest return as compared to any other mutual fund.

ELSS: The fund invests 96.99% in Indian stocks, with 63.65% in large-cap stocks, 15.56% in mid-cap stocks, 10.97% in small-cap stocks.

Suitability

Investors want to invest money for at least three years and are looking for additional benefits of income tax savings in addition to expectations of higher returns. Also, these investors should be prepared for the possibility of a moderate loss in their investment and a lock-in period of 3 years.

If you are looking for low-volatility tax-saving options, this fund is suitable. If your risk appetite is small, then Franklin India Taxshield may be a better option as it is based on large-cap. DSP Tax Saver has no market cap limit.

You will get a deduction under Section 80C of the Income Tax Act for investments up to Rs 1.5 lakh per year in this fund. All other tax-saving items have an allowable deduction for an umbrella of Rs 1.5 lakh. Ideally, investments are made through the systematic investment plan (SIP) route to avoid market distortions.

Conclusion: The DSP Tax Saver Fund has outperformed the ELSS Mutual Fund category overall timelines. The basics and investment strategies are better than any other mutual fund. This fund is an excellent investment for you to save tax and earn huge returns.