Some Important Notes

1. ELSS AND
SECTORAL FUNDS
Group Members:
Nikhil Saini, Vishant Kumar, Apeksha Sharma, Hariom
Gangwar

2. TABLE OF
CONTENT
 About ELSS Fund
 Who Should Invest?
 PROS/Advantages of ELSS Fund
 CONS/Disadvantages of ELSS Fund
 Option For Investing In ELSS Fund
 Scheme Under ELSS Fund
 About Sectoral Fund
 PROS of Sectoral Fund
 CONS of Sectoral Fund
 Scheme Under Sectoral Fund

3. cELSS FUND
• ELSS, as the name suggests, are equity-based mutual funds. These are the
only set of mutual funds that help you avail tax deductions.
• These mutual funds come in with a lock-in period of 3 years. The investment
route can be either lump sum investment or an SIP.
• The monthly investment could be as low as Rs. 500 and there is no
maximum limit.

4.  ELSS funds are chosen by investors who are willing to take
risks as these investments are equity oriented.
 Since there is a risk of volatility, it is advised that you invest
for a longer duration as compared to the lock-in period of 3
years.
 People nearing their retirement could opt for other tax savings
investments like PPF or NSC as they are less volatile.
 However, people who have just started their career and can
invest for a long period of time can opt for the more risky
ELSS funds which would give higher returns compared to
others.
Who should
invest in
ELSS
Funds?

5. PROS of
ELSS Fund
 The lock-in of 3 years is
considerably less as
compared to other close-
ended mutual funds.
 These mutual funds usually
have the potential of earning
higher returns compared to
other tax saving instruments
like PPF or NPS..
 As an investor, you are not
required to have extensive
knowledge of the markets in
order to invest in these
funds. The funds you invest
in are run by expert and
experienced fund managers
who are qualified to handle
your investment.
 There is no maximum limit to
invest.
 Earnings are taxed only at
10% of the gains.

6. CONS/Disadvantages of ELSS Funds
• ELSS is not completely risk averse like other tax saving instruments like PPF. Their risk
profile is similar to any equity oriented mutual fund scheme. It is just that these provide
tax deduction benefits.
• ELSS are shown to have delivered good returns on if invested for more than 5 years.
So it is advisable that an investor must enter into equity (or ELSS) only if the holding
period is more than 5 years, and that also with proper asset allocation.
• Most mutual funds won’t accept investments from people living in Canada and the US.

7. Options for
Investing in
ELSS Funds
Growth option
 One option for investment in ELSS is the growth option- where the
holder will not get any benefits in the form of dividends.
 The investor shall only receive the gains at the end of the tenure.
 This will help appreciate the total NAV and thus multiply the gains.
 The only caveat being since these returns would be subject to
market conditions, it may work in the investor’s favor or maybe
completely bad but it’s possible that the profits might be great.

8. Dividend Option
In this option, the holder gets timely benefits in form of dividends
which are completely tax-free.
Options for
Investing in
ELSS Funds

9. Options for
Investing in
ELSS Funds
Dividend Reinvestments option
• This is an option wherein the investor gets the option of
giving back the dividends received in order to add to
the NAV.
• It is a good option if the market has been performing well
and is likely to continue the same way.
•

10. Scheme
Under ELSS
Fund
• DSP Blackrock :-
• DSP Black Rock tax saver fund is an ELSS Fund, that is
mutual fund scheme where tax deduction of up to Rs. 1.5
lakh available under section 80c of income tax act 1961.
There is no exit load in this scheme.
• ICICI Prudential long term equity fund :-
• This fund invest in companies with attractive valuation and
good growth market. It has generated over 21% returns.
Although 50% of its portfolio is invested in mid-cap and
small-cap companies.

11.  As the name implies sector of the economy, such as energy or utilities.
 Sector funds come in many different flavors and can vary substantially in
market capitalization, investment objective (i.e. growth and/or income) and
class of securities within the portfolio.
 Some sectors and sector fund investing categories may require greater due
diligence than others.
Sectoral Fund

12. PROS of
Sectoral
Fund
 Concentration in particular line :-
 The feature of the sector funds are the concentration in a
particular line of sector and higher returns
 Diversify risk with in sector :-
 By investing in a sector fund you do diversify risk among
the stocks in the same sector.
 Use fund Manager Expertise :-
 A fund manager using the research at his efficiency and
choose the best stocks in sector than an average investor.

13. CONS/Disadvantages of Sectoral Funds
 Narrow Mandate:-
 Sector fund invest only in the chosen sector. If the economy slows down, banking
sector fund suffer due to defacement in assets quality.
 High Volatile :-
 If you look at the performance of the mutual fund, the top performer is likely to be a
sector fund, but the worst performer is likely to be a sector fund.
 Investing based on past returns:-
 As sector funds are fully depends on its market, so you can compare its past
Performance.

14. Scheme
Under
Sectoral Fund
• TATA Digital India Fund :-
• This fund is relatively newest in technology sector fund but it
has made its mark with its splendid return over past 1 year.
This fund is currently most in demand.
• IDFC infrastructure regular plan :-
• This is one of the trading scheme of Sectoral fund. The
objective of this scheme is to generate long-term capital
through Indian infrastructural related activities.