Detailed Overview of Motilal Oswal ELSS Tax Saver Fund – Regular (Growth)
Investing in mutual funds can be a great way to grow your wealth, and when it comes to tax-saving options, Equity Linked Savings Schemes (ELSS) are one of the most popular choices. One such ELSS is the Motilal Oswal ELSS Tax Saver Fund – Regular Plan (Growth). This article provides a detailed overview of this fund, covering its features, benefits, performance, and other important aspects in simple English.
Introduction to Motilal Oswal ELSS Tax Saver Fund
The Motilal Oswal ELSS Tax Saver Fund is an open-ended mutual fund scheme that primarily invests in equity and equity-related instruments. The primary objective of the scheme is to generate long-term capital appreciation, which means it aims to increase the value of your investment over time. This fund also offers the added benefit of tax savings under Section 80C of the Income Tax Act, 1961.
Key Details of the Fund
- Scheme Name: Motilal Oswal ELSS Tax Saver Fund – Regular Plan (Growth)
- AMC (Asset Management Company): Motilal Oswal Asset Management Company Limited
- Inception Date: 21 January 2015
- AUM (Assets Under Management) as of July 2024: ₹3,835.43 Crores
- Minimum Investment – Lumpsum: ₹500
- Minimum Investment – SIP (Systematic Investment Plan): ₹500
- Expense Ratio as of 31 July 2024: 1.83%
- Exit Load: Nil (No fee charged for exiting the fund)
- Risk Rating: Very High
- Lock-In Period: 3 years
- Benchmark: NIFTY 500- TRI (Total Return Index)
Fund Objectives and Investment Strategy
Objective
The primary objective of the Motilal Oswal ELSS Tax Saver Fund is to generate long-term capital appreciation by investing in a diversified portfolio of equity and equity-related instruments. This means the fund manager aims to select a variety of stocks that have the potential to grow in value over time, thereby increasing the value of the fund.
Investment Strategy
The fund follows a growth-oriented investment strategy, focusing on companies that are expected to show strong earnings growth. By investing in these companies, the fund aims to generate higher returns over the long term. Since this is an equity fund, the investments are primarily made in stocks, which come with higher risks but also offer the potential for higher rewards.
Market Capitalization and Key Ratios
- Market Capitalization: ₹16,047.77 Crores
- PE (Price to Earnings) Ratio: 77.73
- PB (Price to Book) Ratio: 12.79
- Dividend Yield: 0.38%
- Portfolio Turnover Ratio: 0.98 times
These ratios and metrics give an insight into the valuation and performance of the companies in which the fund invests. For example, a higher PE ratio indicates that the fund is investing in growth companies, which are expected to deliver strong earnings in the future.
Performance Overview
The performance of a mutual fund is one of the most important factors to consider when making an investment decision. Here’s a look at how the Motilal Oswal ELSS Tax Saver Fund – Regular Plan (Growth) has performed over various time periods:
- NAV (Net Asset Value) as of 28 August 2024: ₹52.14
- 1 Day Performance: ▲0.5%
- 1 Week Performance: ▲2.0%
- 1 Month Performance: ▲6.7%
- 3 Month Performance: ▲16.9%
- 6 Month Performance: ▲29.4%
- 1 Year Performance: p.a.▲63.7%
- 2 Year Performance: p.a. ▲40.5%
- 3 Year Performance: p.a. ▲25.8%
- 5 Year Performance: p.a.▲25.8%
Interpretation of Performance
- Short-Term Performance: In the short term, the fund has shown strong growth, especially over the past 6 months and 1 year, with returns of 29.4% and 63.7% respectively. This indicates that the fund has performed well in recent market conditions.
- Long-Term Performance: Over the long term, the fund has delivered consistent returns, with an average annual return of 25.8% over the past 3 and 5 years. This shows that the fund has been successful in achieving its objective of long-term capital appreciation.
Portfolio Composition
Understanding where the fund invests its money can give you an idea of its risk profile and potential for returns. As of the latest data, the Motilal Oswal ELSS Tax Saver Fund has the following portfolio composition:
- Domestic Equities: 99.3%
- Cash & Cash Equivalents and Net Assets: 0.7%
Sector Allocation
The fund primarily invests in domestic equities, which means it is heavily exposed to the Indian stock market. The high allocation to equities also aligns with the fund’s growth-oriented strategy. The small allocation to cash and cash equivalents indicates that the fund is almost fully invested, with minimal cash holdings.
Benefits of Investing in Motilal Oswal ELSS Tax Saver Fund
1. Tax Benefits
One of the biggest advantages of investing in this fund is the tax benefit under Section 80C of the Income Tax Act. Investments up to ₹1.5 lakh in an ELSS fund are eligible for tax deductions, which can help reduce your taxable income.
2. Long-Term Growth Potential
The fund’s focus on equity investments provides the potential for significant long-term capital appreciation. Historical performance shows that the fund has delivered strong returns over time, making it a good option for investors with a long-term investment horizon.
3. Professional Management
The fund is managed by experienced professionals who analyze market trends, economic conditions, and individual company performance to make informed investment decisions. This professional management helps to optimize returns while managing risks.
4. Low Minimum Investment
With a minimum investment requirement of just ₹500, this fund is accessible to a wide range of investors. Whether you prefer a lumpsum investment or a systematic investment plan (SIP), you can start investing with a relatively small amount.
5. No Exit Load
The fund does not charge an exit load, which means you can redeem your investment without paying any additional fees. This provides more flexibility in managing your investment.
Risks Involved
1. Market Risk
As an equity-oriented fund, the Motilal Oswal ELSS Tax Saver Fund is subject to market risks. The value of your investment can fluctuate based on changes in the stock market. This makes the fund suitable for investors with a high-risk tolerance and a long-term investment horizon.
2. High Volatility
Given its high exposure to equities, the fund may experience significant volatility in the short term. Investors should be prepared for periods of high volatility and should not invest money that they may need in the near future.
3. Lock-In Period
The fund has a mandatory lock-in period of 3 years, during which you cannot redeem your investment. This lock-in period is a feature of all ELSS funds and is something investors should consider when planning their investments.
4. Expense Ratio
The expense ratio of the fund is 1.83%, which is the annual fee charged by the fund to manage your investment. While this fee is relatively standard for an actively managed equity fund, it is important to consider the impact of the expense ratio on your overall returns.
Related Schemes
Motilal Oswal Asset Management Company offers different variants of the ELSS Tax Saver Fund, including:
- Motilal Oswal ELSS Tax Saver Fund (IDCW)-Direct Plan: This plan offers an annualized return of 27.4%.
- Motilal Oswal ELSS Tax Saver Fund (G)-Direct Plan: This growth plan offers an annualized return of 27.4%.
- Motilal Oswal ELSS Tax Saver Fund-Reg (IDCW): This regular plan offers an annualized return of 25.9%.
- Motilal Oswal ELSS Tax Saver Fund-Reg (G): This regular growth plan offers an annualized return of 25.8%.
These variants cater to different investor preferences, such as those who prefer direct investment plans or those who seek income distribution (IDCW) instead of growth.
Conclusion
The Motilal Oswal ELSS Tax Saver Fund – Regular Plan (Growth) is a compelling option for investors looking to save on taxes while aiming for long-term capital growth. With its strong historical performance, focus on growth-oriented equities, and low minimum investment requirement
, this fund is well-suited for investors with a high-risk tolerance and a long-term investment horizon. However, it is essential to understand the risks involved, including market volatility and the mandatory 3-year lock-in period, before investing.
For those who are comfortable with these risks and are looking for a way to reduce their taxable income while potentially earning high returns, the Motilal Oswal ELSS Tax Saver Fund could be an excellent addition to their investment portfolio. As always, it’s advisable to consult with a financial advisor to ensure that this fund aligns with your overall financial goals and risk appetite.
