Union MF Tax Saver Funds ( ELSS )

Union MF ELSS Funds are diversified equity funds which aim at providing investors with an opportunity to grow wealth over the long run. The fund primarily invests in equity and equity related instruments in a given proportion as per the fund’s mandate. The fund manager will pick quality stocks after an in-depth analysis to ensure that the portfolio returns remain in line with the expectations. These funds have a lock-in period of three years. When you invest in Union MF ELSS Funds, you become eligible for a tax deduction of up to Rs 1.5 lakh under Section 80C of the Income Tax Act. In this, the amount invested by you gets deducted from your taxable income. It reduces your overall tax liability.

Union MF ELSS Funds carry moderately high to high market risk as compared to debt funds and balanced funds. The fund value may go up / down as and when the underlying stock price changes. The stock prices might be affected by price and volume changes in the stock markets, interest rates, exchange rates, government policies, tax laws and other economic developments. On account of a well-diversified portfolio, these funds are less riskier than pure small-cap/mid-cap funds and sector/theme-based funds. Moreover, the inherent risks may average out upon staying invested for longer durations. Investors may consider their own risk tolerance before investing in the scheme.

Investing in Union MF ELSS Funds provides you returns by way of capital appreciation and regular dividends. Capital appreciation results upon increase in the underlying stock prices over a given investment horizon. The lock-in period of three years helps the fund manager to take asset allocation decisions without the fear for frequent fund redemptions. This holistic approach may eventually lead to higher returns in the long run. Historically, ELSS funds have known to deliver average returns of around 12%-15% over a period of more than 5 years. However, Union MF ELSS funds do not guarantee assured returns and the fund performance may vary from one period to another. To boost returns, an aggressive investor may consider adding a few small-cap / mid-cap funds to the overall portfolio.

Union MF ELSS Funds are ideal for investors who have a higher risk appetite. These funds have the shortest lock-in period of three years as compared to other tax-saving alternatives. It makes them ideal for wealth creation over the long run in a tax-efficient manner. Investors may invest in Union MF ELSS Funds to achieve long term goals like children’s education, retirement planning and buying a home. To realise the full potential of these funds, you need to stay invested throughout the lock-in period. This may also mean parking only such surpluses in these funds which you won’t need in the near future.