For investors seeking long-term wealth creation and tax benefits, the HDFC ELSS Tax Saver Fund has proven to be a standout option. Launched in 1996, this fund has consistently delivered impressive returns, even outperforming its benchmarks over the years. Here’s a closer look at how disciplined investing in this fund through SIPs has helped investors accumulate substantial wealth.
Impressive Returns Over the Years
The HDFC ELSS Tax Saver Fund has consistently rewarded its investors, making it one of the top-performing funds in the equity-linked savings scheme (ELSS) category. From 2019 to 2024 alone, the fund has showcased a robust performance, delivering returns that significantly outpace standard market growth. Here’s how it performed across different time frames as of 2024:
- 1-Year Return: 47.59%
- 3-Year Annualized Return: 24.80%
- 5-Year Annualized Return: 23.13%
- 10-Year Annualized Return: 14.30%
- Since Inception (28 Years): 22.87% per annum
For long-term investors, such returns can mean substantial growth. For instance, an initial investment of Rs 1 lakh at inception is now valued at over Rs 3.5 crore, proving the power of compounding over time.
SIP Returns: Building Wealth with Regular Investments
Regular investments through a Systematic Investment Plan (SIP) have shown exceptional growth in the HDFC ELSS Tax Saver Fund. Investors who started a monthly SIP of Rs 2,500 back when the fund launched have seen their investment grow substantially:
- Monthly SIP Investment: Rs 2,500
- Total Investment Over 28 Years: Rs 8,40,000
- Current Value: Rs 4.39 crore
These SIPs have yielded annualized returns of 22.53% over 28 years, transforming modest monthly contributions into a sizable corpus.
Top Holdings Fueling Growth
The fund’s robust returns are partly due to strategic stock selections. Some of its key holdings include:
- ICICI Bank: 9.77%
- HDFC Bank: 9.47%
- Axis Bank: 6.14%
- HAL (Hindustan Aeronautics Ltd.): 5.71%
- Cipla: 5.56%
- State Bank of India (SBI): 5.38%
By investing in a diversified mix of sectors—primarily banking, pharmaceuticals, and technology—this fund has maintained resilience and growth.
Expense Ratio and Other Details
As of October 2024, HDFC ELSS Tax Saver Fund has total assets under management (AUM) of Rs 15,934.95 crore and an expense ratio of 1.71% for the regular plan. This fund has a three-year lock-in period, which makes it ideal for those seeking both long-term growth and tax benefits. Importantly, there is no entry or exit load, making it a straightforward option for new investors.
Ideal for Tax-Saving and Long-Term Goals
As an ELSS fund, this scheme provides tax benefits under Section 80C of the Income Tax Act. Investments up to Rs 1.5 lakh per year qualify for deductions, making it a popular choice for tax-saving purposes.
Investors aiming for financial goals at least three years away could consider this fund, but ideally, those looking for a time frame of 5–10 years or longer are likely to benefit the most. The three-year lock-in also serves as a motivator for those wanting to stay invested without frequent withdrawals, which aligns well with long-term wealth-building strategies.
Long-Term Performance: Outshining the Benchmark
The fund’s benchmark, the NIFTY 500 Total Returns Index, has also performed well, but the HDFC ELSS Tax Saver Fund has consistently outpaced it. Here’s how the benchmark compares:
- 1-Year Return: 41.27%
- 3-Year Annualized Return: 18.42%
- 5-Year Annualized Return: 22.25%
- 10-Year Annualized Return: 15.47%
- Since Inception: 14.98% per annum
The HDFC ELSS Tax Saver Fund’s returns have thus regularly surpassed the benchmark, reflecting the fund’s efficient portfolio management.
A 28-Year Success Story in Wealth Creation
Launched on March 31, 1996, HDFC ELSS Tax Saver Fund has journeyed through multiple market cycles, delivering strong returns even during turbulent periods. This resilience makes it appealing for investors who seek steady growth along with tax savings.
This fund has proven that consistency, patience, and a disciplined approach can lead to significant wealth accumulation. For those who began early and maintained their investments, it’s been a journey from modest contributions to building a multi-crore corpus.
Disclaimer: The information provided is based on historical performance, and there is no guarantee of future returns. Consult a financial advisor before making investment decisions.
