Around mid-March, some investors realize they have yet to invest all of their tax-deferred funds. Additionally, the search results them in looking for simple solutions.
If you're also interested in tax-efficient investing, you may want to consider equity-linked savings plans (ELSS) which are commonly known as tax-efficient schemes.
Strong economic growth fueled by government initiatives such as incentives based on production; increased spending on infrastructure; fiscal conservatism and a resurgence in capital expenditures are indicative of increased corporate earnings in the near future. An investment in ELSS can help to maximize returns and minimize tax expense.
Typically, they manage a flexi-cap portfolio. It refers to the fact that the fund's manager has the ability to choose between stocks based on their relative market value. Of course, there can be actively managed schemes that have a greater concentration of mid- and small-cap stocks. Simply put, these investments can be frightening during times of turmoil, which is why you must choose one with a proven record. To maximize wealth via ELSS, one must have a long-term perspective on equities and should maintain investments for 5 to 7 years, ignoring the intermittent nature of the market.
However, those who seek exposure to large-cap stocks in their ELSS should focus their search on passively-managed ELSS funds.
The Securities and Exchange Board of India (SEBI) which is responsible for the regulation of the financial market, last year authorized mutual fund companies to sell ELSS that are passively managed, but with a stipulation. Only fund houses are permitted to launch an ELSS that is passively managed and lacks an existing ELSS. For those with an existing ELSS that is actively managed, it facilitated the passive launch of a scheme that is passively managed if the fund company chooses not to accept new investments in the actively managed scheme.
