UTI Tax Saver Mutual Fund

Investment Objective of UTI ELSS Mutual Fund

UTI ELSS Mutual fund is an open-ended mutual fund scheme that primarily invests in equity-linked securities. The UTI Equity Linked Savings Scheme (ELSS) mutual fund accomplishes dual objectives. Firstly, like any other equity-based mutual fund, it aims to offer long-term capital gains to the investor. Secondly, and more importantly, it aims to offer tax benefits to its investors. The fund warrants an investment for at least 5 years. The UTI ELSS schemes make sure that an investor pays less and earns more.

Quick Disclaimer: The stats used in the article represent the UTI ELSS fund performance as of 31st July 2023.

Risks Involved in UTI ELSS Mutual Fund

UTI ELSS fund risk potential is rated very high. The scheme mainly invests in equities, fully convertible debentures and company warrants. Investments, in partly convertible debentures, are only made under specific conditions. The high-risk nature of the UTI ELSS scheme allows investors to earn high profits but this also exposes them to the vulnerabilities of incurring high risks. Therefore, investors must consult their advisors regarding UTI ELSS fund risk before investing.

Return Potential of UTI ELSS Mutual Fund

The UTI ELSS scheme offers a win-win deal to all its investors. Good earnings and tax savings go in tandem in this fund. The UTI ELSS returns depend on the performance of the stocks the fund has invested in. A 14.49% return on UTI ELSS fund NAV has been recorded since inception. The scheme has invested the maximum in the financial sector (32.38%) and the Auto Components sector (10.23%). HDFC Bank Ltd. (8.38%), ICICI Bank Ltd. (8.16%) and Infosys Ltd. (5.7%) are some of its top holdings. Take a quick look at the UTI ELSS returns over the years. 

Who Should Invest in UTI ELSS Mutual Fund

The UTI ELSS scheme is most suitable for:

• High risk bearing investors who are looking to invest their funds for 5 years or more.
• Investors seeking long-term appreciation of their capital.
• Investors interested in generating wealth via equity-related investments.
• People looking to make tax-friendly investments.

Things to Consider Before Investing in UTI ELSS Mutual Fund

Every mutual fund scheme should be thoroughly analysed before making a commitment. Take a look at the following UTI ELSS scheme parameters as you ponder over investment decisions.

• Fund House: UTI Mutual Fund
• Category: ELSS
• UTI ELSS Fund NAV: ₹158.57
• Fund Size: ₹3158.61 crores
• Expense Ratio: 1.92%
• Exit Load: NIL
• Portfolio Turnover Ratio: 19%
• Fund Manager: Vishal Chopda
• Riskometer: Very High
• Benchmark Index: NIFTY 500 Index
• Investment Modes: SIP or Lumpsum
• Equity Investments: 80%-100%
• Debt Investments: 0-20%

Taxation on UTI ELSS Mutual Fund

Before we understand the tax-saving opportunities offered by the scheme, let us take a look at the tax implications on gains earned from the UTI ELSS scheme. The investments are locked in for 3 years, implying that no redemptions can be made till this period. A 10% Long-term Capital Gains Tax (LTCG), excluding cess/surcharge, without any indexation benefits, is levied on incomes of gains exceeding ₹1 lakh in a financial year.

Now, UTI ELSS mutual fund investments allow you to claim exemptions of up to ₹1.5 lakh from your gross total income in a fiscal year. It is in accordance with Section 80C of the Income Tax Act of 1961. It must be noted that the tax benefit on the fund is considered with all eligible tax saving claims and not as a standalone tax exemption.