Investing in mutual funds is an easy and profitable option for investors to grow money. However, when it comes to taxes, mutual funds prioritize compliance and efficiency to protect their investors’ hard-earned money. ICICI Prudential ELSS Tax Saver funds are specialist choices offered by mutual fund schemes. These funds provide investors the freedom to invest while lowering their tax burden.
Investors can select funds depending on their risk tolerance and financial objectives to protect the security of their assets. In this post, investors will learn about the approach, benefits, and drawbacks of ICICI ELSS, as well as if ICICI offers higher returns. They will also learn if ICICI Prudential mutual funds are qualified for Section 80C tax advantages.
What is the Investing Strategy of ICICI Prudential ELSS Fund?
The primary goal of this scheme is to generate long-term growth in capital by investing approximately 90% of the funds into equity instruments. These equity investments offer the potential for higher returns over the long term.
To enhance diversification and manage risk effectively, the remaining 10% of the investments will be allocated to debt instruments, money market instruments, and cash.
This diversification approach helps mitigate the impact of market volatility and ensures a balanced portfolio that can navigate various market conditions.
Overall, the schemes aim to optimize returns while minimizing risk for investors over the long run.
Merits and demerits of ICICI Prudential ELSS Fund?
Merits of this fund
Tax Benefits
Investments in the ICICI Prudential ELSS fund are eligible for tax deductions under Section 80C of the Income Tax Act, which allows investors to decrease their taxable income by up to Rs.1.5 lakh each year.
Potential for Better Returns
Because the fund invests largely in stocks, it has the potential to provide better long–term returns than typical tax-saving products such as fixed deposits or PPF.
Lock-In Period
The three-year lock-in period promotes long-term investing and disciplined saving habits and is consistent with the fund’s goal of wealth accumulation
Professional Management
The ICICI Prudential ELSS Tax Saver Fund is managed by skilled fund managers who do extensive research and analysis to make knowledge investment decisions that may maximize profits for clients.
Diversification
The fund’s portfolio is distributed across several industries and market capitalizations, which helps to spread risk and perhaps improve stability.
Demerits of ICICI ELSS Fund
Market Risk
Because the fund invests mostly in stocks, it is vulnerable to market fluctuations. Stock market fluctuations can have an impact on both fund performance and investor returns.
No Guaranteed Returns
Unlike fixed-income securities, the ICICI Prudential ELSS fund does not provide guaranteed returns. Investors must be prepared to endure variations in the value of their assets.
Lock-in period
While the lock-in period stimulates long-term investment, it reduces liquidity because investors cannot redeem their assets before three years.
Performance Dependency
The performance of the ICICI Prudential ELSS Tax fund is determined by a variety of factors, including market circumstances, economic developments, and fund manager actions. Poor performance might mean lesser profits for investors
Taxation on Profits
While ELSS funds provide tax benefits, the profits generated by these funds are subject to capital gains tax. Investors must consider the tax consequences while redeeming their assets.
Does ICICI Prudential ELSS Tax Saver Fund Give Better Returns?
Whether or if the ICICI Prudential Tax Fund produces greater returns is determined by a variety of factors, including market circumstances, fund performance, and individual investor goals.
Historically, equity-based investments, such as ELSS funds, have the potential to outperform traditional tax-saving vehicles over time. However, it is important to remember that previous performance does not guarantee future results, and mutual fund returns are susceptible to market risks.
As a result, before deciding if the ICICI Prudential ELSS Tax Saver Fund is right for them, investors should do extensive research and assess their risk tolerance, investment horizon, and financial goals.
Let’s check the Rolling return of this fund:
Over the past three years, this fund has achieved a rolling return of 14.55%, surpassing its benchmark return of 13.89%. This performance indicates that the fund has outperformed its peers within the same investment category
Is ICICI Prudential Mutual Fund Eligible for 80C?
Yes, under Section 80C of the Income Tax Act, taxpayers in India are eligible to claim deductions on certain investments, expenses, and payments, up to a maximum limit of Rs. 1.5 lakh per financial year. Investments made in specified instruments, including certain mutual funds like ELSS (Equity Linked Savings Scheme) funds offered by ICICI Prudential Mutual Fund, qualify for these deductions.
ICICI Prudential Mutual Fund offers various schemes, including ELSS Tax Saver Funds, which are designed to provide investors with the dual benefit of tax savings and wealth accumulation. When investors contribute to these ELSS funds, they can claim deductions of up to Rs. 1.5 lakh from their taxable income in the financial year of the investment.
The amount invested in ICICI Prudential mutual funds under the ELSS scheme is deducted from the investor’s total taxable income, thereby reducing their tax liability. This deduction helps taxpayers optimize their tax planning while simultaneously encouraging long-term investment in equity markets.
Conclusion
In conclusion, investing in the ICICI Tax Fund presents a compelling opportunity for investors to achieve long-term growth while benefiting from tax savings under Section 80C of the Income Tax Act.
The fund’s strategy of allocating the majority of its assets to equity instruments, coupled with diversification across debt and cash, aims to optimize returns while managing risks effectively.
Despite the inherent market risks and lack of guaranteed returns, the fund’s potential for higher returns over the long term Professional management. And tax benefits make it an attractive option for investors seeking wealth accumulation and tax efficiency.
Additionally, the fund’s outperformance compared to its benchmark and peers further underscores its potential to deliver value to investors.
With a rolling return of 14.55% over the past three years, exceeding its benchmark return of 13.89%. The ICICI Prudential ELSS Tax Saver Fund demonstrates its ability to generate competitive returns within its investment category.
Furthermore, investors can leverage the benefits of Systematic Investment Plan (SIPs) offered by ICICI Prudential Mutual Fund to achieve their financial goals systematically.
SIPs allow investors to invest small amounts regularly over time, thereby enabling disciplined saving and wealth creation.
ICICI Prudential ELSS Tax Saver Fund, along with systematic investment plans. Offering the investors a comprehensive solution for long-term wealth accumulation and tax-efficient investment growth.
