A Snapshot of the Best ELSS Mutual Funds in 2025

Things to Remember While Investing in the Best ELSS Mutual Funds

Here are the factors that you need to consider while investing in the best ELSS mutual funds:

ELSS funds come with a lock-in period of 3 years wherein you can redeem your invested money along with the returns only after the completion of 3 years.
Note that the returns of your investment in the best ELSS mutual funds are subject to market risks. As a result, the performance of these funds might vary based on market conditions and volatility.
Investing in ELSS funds for a longer time horizon can help you minimise risks, even though these are subject to market volatility.
Ensure you check the market conditions and the fund performance before you redeem your funds anytime after the 3-year lock-in period.

Benefits of Investing in the Best ELSS Mutual Funds

You can reap the following benefits by investing in the outlined best ELSS mutual funds:

Among various tax-saving investment options, ELSS funds have the shortest lock-in period of 3-years. Other tax-saving investment options in India like tax-saving fixed deposit or PPF have lock-in periods of 5 years and 15 years respectively.
Investing in ELSS funds helps you avail tax benefits of up to ₹1.5 lakh, under Section 80C of the Income Tax Act, 1961. Thus, you can reduce your tax liabilities with your ELSS investments during a financial year.
ELSS funds linked to the market can potentially offer high returns, despite market volatility. On the flip side, other tax-saving plans like tax-saving fixed deposit and PPF offer fixed and lower returns.

A Detailed Overview of the Top ELSS Funds

Here is an overview of some of the best ELSS mutual funds in 2025:

1. SBI Long Term Equity Fund

With its benchmark riskometer aligned to the S&P BSE 500 Index, SBI Long Term Equity Fund (ELSS) invests a minimum of 80% of its assets in equities, cumulative convertible preference shares, fully convertible debentures and bonds, while up to 20% can be allocated to money market instruments. It has been managed by Dinesh Balachandran since September 2016.

Asset Under Management: ₹25,734.58 crore approximately
Expense Ratio: 1.07%
Investment Details: Equity (90.32%), Debt (0.15%), Others (9.53%)
Benchmark: BSE 500 TRI

2. HDFC ELSS Tax Saver Fund

HDFC ELSS Tax Saver Fund - (Direct Growth) was launched on March 31, 1996. As of February 28, 2025, its top holdings include HDFC Bank Ltd. (10.39%), ICICI Bank Ltd. (9.85%), Axis Bank Ltd. (9%), Cipla Ltd. (5.18%) and Bharti Airtel Ltd. (4.82%).

Asset Under Management: ₹14,671.37 crore approximately
Expense Ratio: 1.09%
Investment Details: Equity (92.66%), Debt (0.35%), Others (6.99%)
Benchmark: Nifty 500 TRI

3. Motilal Oswal ELSS Tax Saver Fund

Motilal Oswal ELSS Tax Saver Fund, formerly known as Motilal Oswal Long Term Equity Fund, has 98.17% of its investments in domestic equities. The fund maintains a portfolio turnover ratio of 0.51, indicating a moderate level of portfolio rebalancing.

Asset Under Management: ₹3,405.01 crore approximately
Expense Ratio: 0.72%
Investment Details: Equity (98.17%), Others (1.83%)
Benchmark: Nifty 500 TRI

4. Quantum ELSS Tax Saver Fund

Launched on December 23, 2008, the Quantum ELSS Tax Saver Fund requires a minimum investment of ₹500, making it accessible to a wide range of investors. Over the past year, the fund managers, including Christy Mathai and George Thomas, have updated the portfolio more frequently than their peers.

Asset Under Management: ₹200.37 crore approximately
Expense Ratio: 0.89%
Investment Details: Equity (86.83%), Others (13.17%)
Benchmark: BSE 500 TRI

5. JM ELSS Tax Saver Fund

Launched on March 31, 2008, the JM ELSS Tax Saver Fund has a long and consistent track record, outperforming the category average returns in 5 out of 7 years from 2016 to 2022. Its portfolio is managed by Asit Bhandarkar and Chaitanya Choksi.

Asset Under Management: ₹167.42 crore approximately
Expense Ratio: 1.27%
Investment Details: Equity (95.25%), Debt/Cash (4.75%)
Benchmark: BSE 500 TRI

Key Takeaway

The best ELSS mutual funds can help you earn potential market-linked returns while you avail 80C tax deductions of up to ₹1.5 lakh during a financial year. These funds further help you invest in equities if you have a time horizon of at least 3 years, which is also the ELSS lock-in period. Ensure you check the underlying portfolio of your fund before investing to undertake calculated risks.

Frequently Asked Questions

1. What are ELSS funds?

Mutual funds with ELSS tax benefits help you avail tax deductions up to ₹1.5 lakh under Section 80C of the Income Tax Act, 1961. You can invest in equities for a minimum tenure of 3 years with ELSS schemes.

2. What are the risks associated with the best ELSS mutual funds?

The risks associated with ELSS funds include liquidity and market risks. As ELSS funds have a lock-in period of 3 years, you can liquidate these funds only after the specified lock-in period. Moreover, ELSS funds do not offer fixed returns as they are linked to equity and the market. Thus, the fund performance varies based on market volatility.

3. Where do the best ELSS mutual funds invest?

Usually, ELSS funds invest 80% of their funds in equities. However, the fund manager can choose any sector or company size to create the portfolio of ELSS funds.

4. How do I choose the best ELSS mutual funds for investment?

While choosing ELSS funds, you need to consider the asset under management (AUM), past performance, benchmark performance, expense ratio, fund manager’s past track record and the exit load. Further, you can consider the launch date to understand the return since inception and the vintage of the fund.

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