Invest in a PPF scheme to get tax benefits and risk-free returns

When it comes to investment avenues, there are market-linked investment avenues as well as fixed-income investment avenues. Market-linked avenues provide non-guaranteed returns while fixed income avenues do not depend on the market. They offer a fixed rate of interest irrespective of the volatility in the market. A PPF scheme is a fixed income investment avenue which is quite popular among investors. 

Let’s understand what this scheme is and how it gives you tax benefits and secured returns – 

What is a Public Provident Fund (PPF) Account?

A Public Provident Fund (PPF) account is an account which you can open with your bank. It is a long term savings account which helps you accumulate a guaranteed corpus through fixed interest incomes. The money that you deposit in the PPF Account continues to earn interest at a specified rate and when the account matures you get a lump sum corpus.

Public Provident Fund (PPF) Account eligibility

A PPF Account can be opened by resident Indian individuals. Hindu Undivided Families, companies or NRIs are not allowed to open a PPF Account in their names. Moreover, the PPF Account cannot be opened or operated on a joint basis. One account is allowed in the name of one individual only. 

How does the Public Provident Fund (PPF) Account work?

The PPF account can be opened with any bank. You need to make a minimum deposit of INR 500 to open the account. The maximum deposit which is allowed is INR 1.5 lakhs. Once opened, the account should be kept active by making at least one deposit in the account. You can make a deposit either in a lump sum or in instalments as per suitability. The deposits accumulated in the account earn interest which is determined and fixed by the Government of India. This interest rate is reviewed every quarter and can increase or decrease. Currently, till the quarter ending on 31st March 2020, the PPF interest rate fixed by the Government is 7.90% per annum.

Maturity and withdrawals 

The PPF Account has a fixed tenure of 15 years. This tenure can be increased by 5 more years if you want to stay invested. Once the tenure of the account comes to an end, the account matures and you can redeem it to avail a lump sum corpus. 

Partial withdrawals are permitted from the PPF Account before the account matures. Such withdrawals are allowed from the 7th year of deposit. The amount of withdrawal is limited to 50% of the balance of the PPF Account as at the end of the 4th year. One partial withdrawal can be done from the account in one financial year starting from the 7th year of opening the account.

Public Provident Fund (PPF) tax benefits 

As mentioned earlier, the PPF account is a tax-saving investment avenue. The Public Provident Fund(PPF) tax benefits which you can avail from your investments into the PPF scheme are as follows –

Public Provident Fund (PPF) tax benefits

• The amount of money invested into the PPF account is allowed as a deduction under Section 80C of the Income Tax Act, 1961. The maximum deduction allowed is limited to INR 1.5 lakhs
• If you make partial withdrawals from the PPF Account, the amount of withdrawal would also be allowed as a tax-free benefit in your hands.
• The fixed interest income that you earn on your PPF contributions is completely tax-free.
• When the account matures and you redeem the account, the accumulated balance which you receive from the investment is tax-free. You don’t have to pay any tax on the redemption proceeds from the PPF Account and you can get a tax-free corpus.

A Public Provident Fund (PPF) account is, therefore, a tax saving as well as a risk-free investment avenue. You should invest in the scheme for the benefit of availing fixed returns and also to lower your tax liability. 

Why ELSS mutual funds are beneficial for your financial planning

Mutual funds are looked upon as a favourable investment avenue by many. They give you attractive returns, diversify your risks over a vast portfolio, suit the risk preference of all types of investors and also let you invest affordably through SIPs (Systematic Investment Plans). Though there are different types of mutual fund schemes, ELSS mutual funds are very popular among investors. Let’s understand why – 

What is an ELSS mutual fund?

An ELSS mutual fund is an equity-oriented mutual fund scheme which has at least 65% equity exposure in its portfolio. The scheme allows you tax benefits while creating an attractive corpus for your financial needs. The fund has a lock-in period of 3 years after which it can be redeemed fully or partially.

ELSS benefits

There are many ELSS benefits which make ELSS investments very popular and favoured among investors. These benefits are as follows –

• Easy to invest

You can invest in an ELSS fund easily either online or offline. You can also invest in a lump sum or in monthly instalments through Systematic Investment Plans (SIPs). The investments are affordable and you can start investing in the ELSS mutual fund with as little as INR 500. Such affordable investments allow even small investors to save and create a substantial corpus over time. If you choose SIPs, you can save regularly and get the advantage of rupee cost averaging. You, therefore, don’t have to time the market movements. Moreover, SIPs also give you the benefit of compounding and help you earn good returns over a long period of time.

• Attractive returns

Since ELSS mutual funds are equity-oriented schemes, they offer good returns. If numbers are to be believed, one of the best ELSS fund, Axis Long Term Equity Fund has given an annual return of 28.7% and a CAGR of 17.01% over a 3-year period as on 19th February 2020. Such high returns help you to maximize your investments and build up a substantial corpus over time. Since returns dominate your preference of an investment avenue, ELSS funds sure top the chart.

• Disciplined investment

ELSS mutual funds have a lock-in period of 3 years and you cannot redeem your investments before the lock-in period is over. This creates a disciplined approach to savings and you can remain invested in the scheme for a good enough tenure to generate returns. Thus, ELSS funds help you avoid the temptation of early withdrawals or redeeming your investments for any short term financial need making you disciplined towards investing. This disciplined investment grows your corpus, gives good returns and creates a corpus for your financial needs.

• Tax benefits

Last but not the least, ELSS investments give you tax benefits and this is one of the primary reason why the investment is favoured by investors. The money that you invest into the ELSS scheme is allowed as a deduction under Section 80C up to INR 1.5 lakhs. Through this deduction, you can lower your taxable income and reduce your tax liability. In fact, through ELSS investments you can save up to INR 45,000 in taxes if you are in the 30% tax bracket. Even in case of returns generated from the scheme you get tax benefits. Returns up to INR 1 lakh are completely tax-free in your hands. Excess returns are, however, taxed but the tax rate is 10% which is not very high. Thus, ELSS investments are tax-efficient and beneficial.

With these benefits ELSS mutual funds become a favourable investment avenue. So, choose from a list of the best ELSS funds for investments and tax planning and create a corpus to meet your financial goals.  

Axis Bluechip Fund Review and Performance

A wise person had once said, when the going gets tough, the tough get going! This stands true for stocks during market volatility as well but the Axis Bluechip Fund has proved its stability even during such times. Bluechip stocks are better adept at handling such fluctuations and generating higher (or at least stable) returns across market cycles. Read on to know about one of the star bluechip funds in the Indian market – Axis Bluechip Fund.

Axis Bluechip Fund Details

Launched in the year 2013, Axis Bluechip Fund is one of the best schemes in the large-cap category. The core objective of this fund is capital appreciation in the long-run through investments in predominantly equity and related securities (including derivatives). The stock selection criteria revolve mainly around superior asset quality companies at a reasonable price. Almost 87% of the portfolio is invested in stocks of bluechip companies. This makes the fund a good choice for investors with low to medium risk appetite as bluechip companies are traded frequently (hence easy liquidity) and also less affected by market fluctuations. Their proven track record, strong management and robust business models make them capable to deliver consistent and growing returns. The fund size (AUM) has crossed Rs. 9480 crores as on 30th November 2019. 

Axis Bluechip Fund Asset Allocation

The Axis Bluechip Fund Asset Allocation is well-diversified in nature. In terms of sectoral allocation, financial services constitute a major chunk of the portfolio (41.84%) followed by Consumer Goods (15.69%) and Information Technology (15.7%). Big names such as HDFC Bank Ltd, Reliance Industries, ICICI Bank, Kotak Mahindra, Bajaj Finance, Infosys, etc. are part of the issuers for this Fund.

Risk-o-meter

The risk level associated with this fund is “Moderately High”. It is ideal for investors who have a long-term investment horizon.

Axis Bluechip Fund Manager

The Fund is being managed by Mr Shreyash Devalkar since November 2016. He is a market veteran and has rich experience of more than 16 years.

Axis Bluechip Fund Asset Allocation and Performance Scorecard

The Fund has an enviable report card. It has displayed its ability to generate superior and consistent returns over various time periods. It has surpassed the category benchmark (Nifty 50 TRI) returns by a handsome margin 

	Axis Bluechip Fund	Category Average
5-Year	12.32%	9.17%
3-Year	22.62%	14.52%
1-Year	21.9%	13.18%

If you had invested Rs. 10,000 in this fund in 2010, it would be now worth Rs. 22,900 now.

It is a lucrative option compared to other investment avenues as well. If you had invested Rs. 5,000 in a monthly SIP for a period of five years, this is how your money would have grown

	Total Value (In Lakhs)	Gains (In Lakhs)
Axis Bluechip Fund	4.49	1.49
Category Average	3.92	0.92
Fixed Deposits in Banks	3.58	0.58
Gold	3.73	0.73

Final Words

Axis Bluechip Fund is a dependable investment option. It has generated category beating returns since its inception. Moreover, it has not only proved its mettle when the markets are strong but has also displayed its capability to protect losses during choppy times. The fund is highly immune to market fluctuations because of the high-quality large-cap stocks in its portfolio and its low-risk debt position philosophy. Hence, you have a winner in your hands – the potential for superior returns as well as protection during a slowdown. What more could you ask for!

Why you should invest in Mirae Asset Tax Saver Fund

Mirae Asset Tax Saver Fund is among the most popular ELSS funds available in the market. This fund was launched on December 28, 2015, and has been managed by Neelesh Surana. This fund aims to invest in stocks and equity-related instruments across various market caps, investment themes and investment styles to generate long-term appreciation and wealth while providing tax savings under section 80C of the Income Tax Act of 1961.

Neelesh Surana has invested in dominant players in all major sectors, which provides great stability to the portfolio. This is reflected in its high beta of 0.95. The program performed well regularly as compared to benchmarks and peers in the ELSS category. In the last three years, the fund has returned 17.65%.

The main objective of Mirae Asset Tax Saver Fund is to generate a long-term appreciation of capital from a diversified portfolio. Like all other mutual fund plans that save taxes, this fund also does not guarantee any returns, irrespective of its past performance. 

The benchmark for this fund is NIFTY 200. The minimum investment is 500 rupees monthly or quarterly and in multiples of 500 rupees / - thereafter.

One should consider the Mirae Asset Tax Saver Fund because of its allocations which are spread across large caps, mid-caps and small caps in a ratio of 74.32%, 17.56% and 7.33% respectively from its total Assets Under Management.  Cash holdings constitute 0.79% of the total assets. 

This holding composition provides diversification, growth opportunities as well as less volatility to the investment considering that almost all kinds of companies are part of the portfolio in a decreasing correlation with their expected volatility. 

The monthly average expense ratio (including Statutory Levies) as on November 2019 is 2.19% for the regular plan and o.23% for the direct plan. Expense ratio is the commission charged by mutual fund houses from their investors as a fee for their services of the overall management of the fund allocation.

Before investing in a tax saving mutual fund, you have to analyze various risk ratios which offer a peek into the fund’s risk profile. These ratios are Volatility (Standard Deviation), Beta, Sharpe Ratio, Treynor's Ratio and Jenson’s Alpha. 

Ratios (Annualised)
Volatility	12.80%
Beta	0.94
R Squared	0.94
Sharpe Ratio	0.93
Information Ratio	1.16
Portfolio Turnover Ratio	0.59 times

The Net Asset Value (NAV) of Mirae Asset Tax Saver Fund in both growth option and Dividend option is also very lucrative considering the current pricing in the market. 

Net Asset Value (NAV)
Regular Growth	Regular  Dividend	Direct Growth	Direct Dividend
19.025	16.17	20.15	17.258

The performance report of the Mirae Asset Tax Saver Fund shows that its returns have been above the scheme benchmarks and additional benchmarks. 

Performance Report
Period	Returns (%)
	Mirae Asset Tax Saver Fund	Scheme Benchmark	Additional Benchmark
Last 1 Year	8.84	4.42	8.07
Last 3 Year	13.86	10.08	12.92
Since Inception	16.41	11.10	12.59
Value of Rs. 10000 invested (in Rs.) since inception	17,703	14,854	15,616
Scheme Benchmark	NIFTY 200 (TRI)
Additional Benchmark	S&P BSE Sensex (TRI)

The performance report of the Mirae Asset Tax Saver Fund is very impressive. The return on investment of the last one year is 8.84%, last 3 years is 13.86% and from inception, it is 16.41%. If you invested Rs 10,000 in Dec 2015, today your asset value would be Rs 17,703. In comparison, benchmark indices Nifty 200 and S&P BSE Sensex would have returned Rs 14,854 and Rs 15,616 respectively in the same period.

If we compare the last 3-year return on Mirae Asset Tax Saver Fund, scheme benchmark and additional benchmark, the  Mirae Asset Tax Saver Fund has a higher return and it is 13.86% as compared to 10.08% of scheme benchmark and 12.92% of additional benchmarks. From its inception on 28th December 2015, the  Mirae Asset Tax Saver Fund has given the highest return compared to scheme benchmarks and additional benchmarks. it is 16.41% as compared to 11.10% of scheme benchmark and 12.59% of additional benchmarks. 

The SIP performance of Mirae Asset Tax Saver Fund is also very impressive making it a strong contender in the ELSS category.

SIP Performance
SIP Investment	Since Inception	3 Year	1 Year
Total Amount Invested	₹4,70,000	₹3,60,000	₹1,20,000
Mkt Value as of 39th Nov 2019	₹6,29,809	₹4,33,312	₹1,31,370
Fund Return *(%)	15.06	12.43	18.08
Benchmark Return	10.81	9.25	12.34
Additional Benchmark Return	14.07	13.6	16.24