Escorts Tax Plan-Growth: A Consistent Performer for The Last 3 Years

Escorts Tax Plan-Growth: A Consistent Performer for The Last 3 Years

Feb 27, 2018

Tax planning is an important aspect of financial planning. When you invest in certain funds, your taxable income qualifies for tax deductions under section 80 C of the Income Tax Act, 1961. One of the easiest ways to reap tax benefits is by choosing tax saving mutual funds called Equity Linked Savings Schemes (ELSS), for investment.

Since ELSS are diversified funds, you can reap dual benefits from them. On one hand, they allow tax deductions, on the other, they cause capital appreciation.

As the name suggests, ELSS has the majority of its corpus parked in the equities. So, when you invest in an ELSS fund, the returns you get reflect returns from the equity market.

Most ELSS funds have a lock-in period of 3 years from the date on which you have made the investment. That means, when you invest in an ELSS fund with the SIP approach, each of your investments gets locked in for a period of three years from its respective date of investment.

If you want to exit an ELSS fund, you can do so by selling it post the completion of the lock in period i.e. 3 years.

Like other equity funds, dividend and growth options are available for ELSS funds. In growth schemes, a lumpsum amount is received by investors on the expiry of three years.

Although there are many ELSS products in the market, Escorts Tax Plan-Growth simply stands out. It is an open-ended Equity Linked Savings Scheme, launched in March, 2000. If you want to invest in this scheme then you can start small. The minimum amount that you will have to invest is INR 500. So, this is an amazing scheme for small scale investors.

What is the investment objective of this scheme?

The primary aim of this scheme is to ensure capital appreciation. This, it does by making investment in a portfolio, which is well diversified. The portfolio includes equity shares having potential for growth.

Escorts Tax Plan-Growth is suitable for you if you are -

  • Looking for capital appreciation over a long-term horizon.
  • Willing to capitalize on equity and equity linked instruments.
  • Looking to get some tax relief.

Below, you find the scheme performance table of Escorts Tax Plan-Growth. Here, you can see that the returns offered by the scheme in its first year of launch was 34.73% against 38.37% of market average and 29.22% of CNX Nifty benchmark. In the third year of its advent, the scheme offered a return of 19.93%. That year, the CNX Nifty benchmark was 8.29% and the return offered by other comparable funds in the market was 14.65%. In the fifth year of the scheme’s inception, it gave a return of 19.67%, whereas the benchmark for that year was 12.04% and the market average was 18.71%. In the tenth year, the performance of the scheme dipped a little with a return of 3.18% against 9.04% offered by other similar ELSS funds in the market and a 6.12% of benchmark. If we look at the overall since-launch returns, then we will see that the scheme gave a return of 13.46% against 14.09% of CNX Nifty benchmark and a return of 17.39% offered by other comparable funds operating in the market. Remember, an overall return of 13.46% is still good.

Source: Swaraj Wealth Research

Now, let’s have a look at the yearly performance bar graph of the scheme below. The time period spanning 2012 to 2016 has been taken for this evaluation. While the performance of the scheme in the year 2012 and 2013 was lower than other comparable funds, for the rest of the years i.e. 2014, 2015, and 2016, the performance was higher than other ELSS funds in the market. The performance of the scheme in these years had been, in one word, impressive, with a return of 13.67% marked in the year 2016.

Source: Swaraj Wealth Research

Now, also let’s have a look at the rolling returns offered by the scheme. In the last three years, that is from Dec 19, 2014 to Dec 19, 2017, the rolling returns offered by the scheme were really impressive. While Escorts offered 19.98% during this period, other similar ELSS funds in the market gave only 13.29%.

Source: Swaraj Wealth Research

Although Escorts Tax Plan-Growth has shown a consistently good performance for the last three years, you must consult your financial advisor regarding whether or not it will suit your specific financial goals.

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