Tax saving Mutual Funds

POSTED BY Chandan M ON March 8, 2013 4:22 pm COMMENTS (5)

Hi,

I have narrowed down two tax saving mutuals funds to invest in

1) axis long term equity fund

2) canara robeco equity tax saver

Basically these have been rated as rank 1 by crisil. Could you please suggest if these are good MFs to invest in. Are there any better Tax saving MFs to invest in?

Is it better to invest in MFs with low NAV (both have these have low NAV) or in MFs with big NAVs (HDFC tax saver NAV is quite high). Will the percentage return depend on the NAV? MF with small NAV will be more influenced by market fluctuations?

Also could you tell me if I have to consider other parameters as well before investing.

Are there any hidden costs that I should look out for?

Which would be better option for these MFs, dividend or growth.

Also could you tell me if I have to consider other parameters as well before investing.

Sorry for asking so many questions.

Thanks in advance,

Chandan

5 replies on this article “Tax saving Mutual Funds”

  1. Dear Chandan, as dear FFC, has answered your query properly hence not adding any more.

    Thanks

    Ashal

  2. Chandan M says:

    Hi Ashal and FFC,

    Thanks for your replies. You were correct, i had not gathered much info. I have gone through several of you posts and queries as well as posts by Manish Chauhan.

    I have gone through Valueresearchonline and tabulated the data.

     Franklin India Taxshield and  Canara Robeco Equity Tax Saver Regular both have impressive numbers. Could you tell me which one to go for between these two? I want to invest in the Direct growth plans. Franklin can be invested in online so I am more inclined towards it, right now there is no option to invest online in Canara Robeco for new investors.

    Also could you tell me why I shouldn’t go for Axis Long Term Equity. Even this has good numbers but is only 3 years old.

    Also FFC can you tell me why you told to avoid SIP in tax savers? I had read in an earlier post that it is good to invest through SIP in MFs.

    Thanks again for your help.
    Regards,
    Chandan

    1. Dear Chandan,

      Go with Franklin as it is easier to invest online. Nothing wrong to Choose Axis but I would prefer an older fund like Franklin.

      MF SIPs are great except for ELSS funds.

      Each SIP transaction in a SIP has a lock-in of 3 years.

      Suppose you start a SIP for 3 years and the funds performance starts dipping after 1.5 years. You can stop the SIP but you cannot take the invested units before the lock-in.
      This way ELSS SIPS are not as flexible.
      Best is to invest over say 6 installments in a year instead of a SIP.

  3. Dear Chandan, please do not invest at all for the time being. Please read several past queries in the forum & learn more. once your thought process ‘ll be clear, you ‘l feel much secure about your choices & the very basic flawed thinking of low NAV v/s High NAV ‘ll not be there.

    thanks

    Ashal

  4. Choose only one tax saver. (Can Reb. should do)
    Ignore NAV. Returns and high NAVs are not related at all.
    You need to look at past performance, expense ratio, risk and return ratios before choosing.
    Avoid SIPs in tax savers.

    Use this to understand the parameters before choosing a MF

    http://freefincal.wordpress.com/step-by-step-guide-to-choosing-a-mutual-fund/

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