Best ELSS Mutual Funds in India 2026: Top 10 & Guide
What ELSS mutual funds are, who should invest, key risks, and the top 10 funds with returns and risk data.
An ELSS (equity-linked savings scheme) is an equity mutual fund with a 3-year lock-in that qualifies for a deduction under Section 80C of the Income Tax Act, 1961. It suits taxpayers who want to save tax while taking equity risk. This guide covers how ELSS works, its benefits and risks, and the top 10 ELSS funds from our data.
Key takeaways
- ELSS funds invest at least 80% of assets in equity securities and carry a 3-year lock-in.
- Investments are eligible for a Section 80C deduction of up to ₹1.5 lakh, subject to your chosen tax regime.
- The 3-year lock-in is shorter than that of other tax-saving options such as PPF, which has a minimum maturity of 15 years.
- Returns are not guaranteed, and units cannot be redeemed or transferred during the lock-in.
- The top 10 funds below are ranked by an internal score, with return and risk numbers shown.
What are ELSS mutual funds?
An ELSS is an equity mutual fund scheme that invests mainly in equity and equity-linked securities, with some exposure to fixed-income securities. Unlike other mutual fund schemes, it has a lock-in period of 3 years. It is the only type of mutual fund eligible for deduction under Section 80C of the Income Tax Act, 1961.
Who should invest in ELSS funds?
- Tax savers: any taxpayer prepared to accept the risk of an equity-linked tax-saving option.
- Long-term investors: the lock-in keeps you invested for at least three years, and these funds tend to do better when held beyond it.
What should you consider before investing?
- Lock-in: the minimum lock-in is three years and you cannot redeem before it ends.
- Returns: they depend on the performance of the underlying securities and are not guaranteed, though a longer horizon can yield more than many other tax-saving options.
- Investment horizon: to ride out equity volatility, plan for longer than five years.
Advantages of ELSS mutual funds
- Shortest lock-in among tax-saving options, making them more liquid than alternatives such as PPF.
- Return potential: unlike fixed deposits and PPF, which give fixed income, ELSS NAV moves with the stocks held and can rise significantly.
- Tax benefit: investments up to ₹1.5 lakh are eligible for deduction under the Income Tax Act, subject to the regime you choose.
- Two ways to invest: a SIP in regular instalments or a lump sum in one go.
Risks of ELSS mutual funds
- Liquidity risk: you cannot redeem or transfer units during the three-year lock-in.
- Market risk: equity prices can fall because of recession, politics, market sentiment and other factors, and ELSS funds must keep at least 80% of assets in equity securities.
How are ELSS mutual funds taxed?
The Section 80C deduction applies to ELSS investments, and gains after redemption are subject to capital gains tax as for equity funds. Rates, limits and regime rules change, so check the current rules or speak to a tax advisor before you invest.
Top 10 ELSS mutual funds ranked by an internal score
These are the top 10 ELSS funds from our data, ranked by Invo Wealth's internal fund-quality score. The score itself is not shown, only the return and risk numbers behind it. A "--" means the fund has not completed that period or the data is unavailable.
Returns across 6 months to 5 years
Performance data as of 5 September 2026.
| Fund | 6M CAGR | 1Y CAGR | 3Y CAGR | 5Y CAGR |
|---|---|---|---|---|
| HDFC ELSS - Tax Saver Fund | -2.85% | -2.83% | 13.09% | 13.97% |
| SBI ELSS Tax Saver Fund | -2.03% | -0.69% | 14.01% | 14.50% |
| SBI Long Term Advantage Fund - Series V | 16.67% | 3.99% | 20.67% | 15.55% |
| Sundaram Long Term Tax Advantage Fund Series IV | 37.26% | 12.01% | 13.02% | 17.69% |
| Sundaram Long Term Tax Advantage Fund Series III | 38.36% | 12.31% | 12.82% | 17.49% |
| Motilal Oswal ELSS Tax Saver Fund | 45.25% | 13.75% | 21.28% | 16.06% |
| WhiteOak Capital ELSS Tax Saver Fund | 19.94% | 4.78% | 15.23% | -- |
| SUNDARAM LONG TERM MICRO CAP TAX ADVANTAGE FUND SERIES VI | 39.56% | 9.77% | 12.04% | 16.05% |
| Quant ELSS Tax Saver Fund | 29.83% | 15.11% | 13.91% | 14.44% |
| SUNDARAM LONG TERM MICRO CAP TAX ADVANTAGE SERIES V | 40.13% | 10.76% | 12.52% | 15.81% |
Risk and consistency metrics
| Fund | ISIN | Volatility | Max drawdown (3Y) | Sortino ratio |
|---|---|---|---|---|
| HDFC ELSS - Tax Saver Fund | INF179K01BB8 | 14.92% | -15.03% | 0.57 |
| SBI ELSS Tax Saver Fund | INF200K01495 | 15.77% | -16.13% | 0.61 |
| SBI Long Term Advantage Fund - Series V | INF200KA1RU2 | 17.85% | -16.40% | 1.08 |
| Sundaram Long Term Tax Advantage Fund Series IV | INF903JA1CX1 | 19.83% | -22.16% | 0.42 |
| Sundaram Long Term Tax Advantage Fund Series III | INF903JA1BR5 | 19.94% | -22.79% | 0.40 |
| Motilal Oswal ELSS Tax Saver Fund | INF247L01544 | 23.09% | -27.89% | 0.85 |
| WhiteOak Capital ELSS Tax Saver Fund | INF03VN01647 | 17.11% | -16.66% | 0.66 |
| SUNDARAM LONG TERM MICRO CAP TAX ADVANTAGE FUND SERIES VI | INF903JA1AX5 | 20.38% | -23.45% | 0.34 |
| Quant ELSS Tax Saver Fund | INF966L01135 | 20.11% | -26.20% | 0.47 |
| SUNDARAM LONG TERM MICRO CAP TAX ADVANTAGE SERIES V | INF903JA1930 | 20.56% | -23.69% | 0.37 |
Remember that ELSS units are locked in for three years, so judge each fund on its 3-year and 5-year CAGR and its drawdown, not only recent returns.
How to invest in ELSS mutual funds
You can invest in these funds using the Invo Wealth app. Sign up, get complete portfolio insights and start investing in mutual funds that actually suit you.
Conclusion
ELSS combines equity growth potential with a Section 80C deduction and a short lock-in. Make sure you can leave the money invested for the lock-in and beyond.
Frequently asked questions
What is an ELSS fund?
An equity-linked savings scheme (ELSS) invests mainly in equity and equity-linked securities, with some exposure to fixed-income securities. It has a mandatory 3-year lock-in period.
How do ELSS funds help save tax?
ELSS investments are eligible for a deduction under Section 80C of the Income Tax Act, 1961, up to ₹1.5 lakh. Whether you can claim it depends on the tax regime you choose, so check the current rules.
What are the disadvantages of ELSS funds?
The two main risks are liquidity risk, because you cannot redeem during the lock-in, and market risk, because the money is invested in equities and returns are not guaranteed.
Who should invest in ELSS funds?
Taxpayers who are ready to take equity risk to save tax, and long-term investors, ideally with a horizon longer than the 3-year lock-in.
How can I invest in elss mutual funds?
You can invest through a SIP or a lump sum. To invest in these funds, you can use the Invo Wealth app: sign up, get portfolio insights and start investing.
Mutual fund investments are subject to market risks; read all scheme-related documents carefully. This article is for education only and is not investment advice. Past performance does not guarantee future returns. Invo Wealth is an AMFI-registered mutual fund distributor (ARN-368528).