Should I switch to Reliance Tax Saver (ELSS) Fund?

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Reliance Mutual Fund is one of the top mutual fund companies in India and its Reliance Tax Saver (ELSS) Fund is an open-ended equity scheme which aims at long-term capital appreciation.

This scheme is flexible enough to deal with the investment requirements of different customers. It is best suited for people who are looking forward to long term capital growth at minimum possible risk.

ELSS or Equity Linked Savings Scheme is the only mutual fund that is eligible for up to Rs. 1 lakh 50 thousand of tax deduction u/s 80C of the IT Act. If you wish to get some tax benefits, nothing can be better than investing in Reliance Tax Saver Fund.

This tax-saving fund provides returns of 10.80% and 15.51% over the last 3-year and 5-year periods respectively.

As of February 2019, this scheme has outshined its benchmark return of 13.54% by a margin of almost 2%, in the 5-year period run. Reliance Tax Saver Fund is considered to be the best investment option, which promises great returns with a moderate amount of risk.

Basic Information about Reliance Tax Saver (ELSS) Fund

1) This open-ended linked to equity saving scheme was launched by Mr. Ashwini Kumar in 2005, which has a lock-in three years along with several tax benefits.

2)  The risk involved in this scheme is moderately high and is best suited for investors looking for long term capital gain.

3)  You are not allowed to redeem your investment until the completion of the lock in period. Once it is complete, you will get the redemption cheque within 3-4 working days after receiving a valid redemption request.

4)  Another amazing thing under this scheme is that you won’t be charged with any entry load or exit load.

The investment philosophy of Reliance Tax Saver Fund

Reliance Tax Saver (ELSS) Fund tries to maintain equality between large-cap companies and mid-cap companies and fosters potential leaders. It aims to invest in companies that have high growth prospects in 2-3 years.

Process for Investment in Reliance Tax Saver Fund

It is extremely easy to invest with Reliance Mutual Fund (RMF). Whether you are a new investor or an existing one, you can transact whenever and wherever you want with the help of these simple methods.

  • You can visit the official website of the firm www.reliancemutual.com
  • You can download the mobile application or use their SMS service.
  • You can fill up the application form and visit the designated investor service center.
  • You can call up the customer care number 1860 266 0111.
  • You can buy the scheme through a stock exchange
  • You can use Reliance Any Time Money card that offers 24X7 accessibility and liquidity to investors of mutual funds.

Advantages and Disadvantages of Reliance Tax Saver Fund

The scheme has outshined the benchmark index of 11.83% as well as the category average of 12.66% with 15.40% returns over 10 years.

Being an aggressive performer, Reliance Tax Saver (ELSS) Fund has experienced its ups and downs with record-breaking returns on one hand and a moderate show on the other.

In 2014-15, this scheme was given the ranking of five stars due to its chart-busting performance, which eventually dropped to three stars and later climbed up the ranking table again.

Plans available under Reliance Tax Saver Fund

Here’s the list of plans offered under this scheme:

  • Growth Plan
  • Growth Option
  • Dividend Payout Option
  • Dividend Plan
  • Annual Dividend Payout Option
  • Direct Plan-Growth Plan
  • Growth Option
  • Direct Plan - Dividend Plan
  • Dividend Payout Option
  • Annual Dividend Payout Option

The options available under each plan  are:

  • Growth option
  • Annual Dividend Payout Option
  • Dividend Payout Option

Special Facilities offered by Reliance Tax Saver (ELSS) Fund

Here are some of the special facilities that the investors can enjoy under Reliance Tax Saver (ELSS) Fund:

Systematic Investment Plan (SIP)

SIP allows the investors to put in a fixed amount at regular intervals rather than investing a lump sum amount. This way, the investors will not have to worry about fluctuations in the market prices.

Systematic Transfer Plan (STP)

STP requires the investor to transfer a particular amount of money at regular intervals to other mutual fund scheme promoted by Reliance Mutual Fund. Investors have the freedom to choose the amount they wish to transfer and at what frequency. There are several options available within the STP. If you wish to go for the STP facility, you have to maintain a minimum balance of Rs.5000 in your portfolio.

Multiple Systematic Transfer (MST) Plan

MST plan is somewhat similar to the STP plan when it comes to transferring money from one fund to another. However, MSTgives investor the liberty to transfer money to more than one scheme offered by Reliance Mutual Fund. Here also investors can choose the amount of transfer and at what frequency.

Reliance SIP Insure

In this facility, a free of cost group term insurance is offered to SIP investors. This add-on life insurance cover looks after the pending installments if the insured unfortunately dies during the SIP period.

Reliance Salary Advantage

This plan is particularly designed for employers to provide SIP facility to their employees. In this plan, the employers can deduct a particular amount from the monthly salary of their employees and put it in the fund.

Dividend Transfer Plan

This facility allows the investor to transfer the dividend earned in this scheme to any other scheme for investment purposes.

Systematic Withdrawal Plan (SWP)

In this facility, the investors can withdraw a minimum amount of Rs. 500 and in multiples of Rs.100 thereafter, at regular intervals.

Flexible Asset Selection Tool (FAST)

Flexible Asset Selection Tool caters to the individual requirements of investors in the market. It offers customized investment solutions based on the objectives of investors. After analyzing the investor’s risk, FASTcreates a model suggesting the allocation of funds under different types of schemes.

Investment amount for Reliance Tax Saver (ELSS) Fund

This scheme requires you to invest a minimum of Rs.500 and in multiples of Rs.500 after that.

If you plan to invest in a Systematic Investment Plan (SIP):

The minimum amount to be invested is Rs.500 in the first month and multiples of Rs.500 after that for 12 months. You can also choose to invest Rs.1000 in the first month and then continue doing it in the multiples of Rs.500 for at least 6 months.

If you wish to go for quarterly option you will have to invest at least Rs.500 in the first quarter and continue doing so in multiples of Rs.500 for a minimum of 12 quarters.

You can also choose to invest Rs.1500 in the first quarter and continue doing so in multiples of Rs.500 thereafter for at least 4 quarters.

You opt to invest Rs.5000 in the first year and multiples of Rs.500 thereafter for at least 2 years.

If you plan to invest in a Systematic Transfer Plan (STP), you can choose from any of the options mentioned below.

Switch-in transactions

  • Daily - Minimum of Rs.500 and in multiples of Rs.500 thereafter
  • Weekly/fortnightly/monthly - Minimum of Rs.1,000 and in multiples of Rs.500 thereafter
  • Quarterly - Minimum of Rs.3000 and in multiples of Rs.500 thereafter

Switch-out transactions

  • Daily - Minimum of Rs.100 and in multiples of Rs.100 thereafter
  • Weekly/fortnightly/monthly - Minimum of Rs.1,000 and in multiples of Rs.100 thereafter
  • Quarterly - Minimum of Rs.3,000 and in multiples of Rs.100 thereafter

No Entry or exit load will be applicable All the unit holders also have to keep in mind that they have to maintain a minimum balance of Rs.5000 before opting for the STP facility.

If you plan to invest in a Systematic Withdrawal Plan (SWP):

A minimum amount of Rs.500 has to be invested and you can then continue to do so in multiples of Rs.100 after that.

Who all are Eligible to Invest in Reliance Tax Saver (ELSS) Fund

The following people are entitled to invest in Reliance ELSS Fund.

  • Adult Indian residents, either singly or jointly (maximum of three)
  • Parents or legal guardians can invest on behalf of the minors
  • Hindu Undivided Family (HUF) through its Karta
  • Societies registered under Societies Registration Act, 1860
  • Companies and corporate bodies
  • Public sector undertakings
  • Banks, financial institutions, and investment institutions
  • Partnership firms
  • Foreign institutional investors who are registered with the SEBI
  • People of Indian origin and Non-Residential Indians (NRIs)
  • Investors of foreign portfolio
  • Religious and charitable trusts
  • Corporations and Insurance companies that are registered with IRDA
  • Scientific organization and industrial research
  • Qualified foreign investors
  • Employee and retirement benefit funds like provident fund, gratuity, pension, etc.
  • Overseas financial companies which have invested in India

Note: This is just an indicative list. The investors can easily consult with their financial advisors to understand whether the scheme is a good choice and suitable or not.

Conclusion

Though equity schemes are at higher market risk, it promises much higher returns compared to other schemes in the market.

Moreover, Reliance Tax Saver (ELSS) Fund gives the freedom to the investors to withdraw their funds anytime and anywhere they wish to. This scheme has seen a growth of almost 20% in the last 5 years.

The diverse range of flexible options offered under this scheme helps investors to multiply their wealth through different types of products.

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