AN EVALUATION OF INVESTMENT PERFORMANCE OF ELSS AND DIVERSIFIED EQUITY FUND – AN EMPIRICAL STUDY

Abstract

A Comparatively unpopular product for tax-saving investment is Equity-Linked Savings Scheme (ELSS). It is an equity mutual fund product that helps in capital appreciation along with saving the tax. An equally less popular equity product is Diversified Equity Fund which does not offer any tax benefits but offers potential for capital appreciation. With more than two decades of its existence, it is necessary to examine their performance. The present study analysis the investment performance both of these funds. The main objective of this study is to compare and evaluate the performance of ELSS and diversified equity fund with growth plans by taking entire sample of ELSS from 2010-2019 with minimum three years track record and top 12 funds of diversified equity with highest AUM (Asset Under Management). The present research study has considered Net asset value of only the Growth plans of ELSS & Diversified funds for the study. The present study has used various statistical tools such as Sharpe ratio, Averages, ANNOVA, T test and Robust Tests of Equality of Means. The findings of the study exhibit that overall, ELSS funds have performed less well than Diversified Equity funds on the basis of total risk undertaken. Among the 43 sample of ELSS funds two funds of HDFC Mutual fund namely HDFC Long Term Advantage fund with and HDFC Tax saver with 10-year track record from the ELSS category, have performed better over diversified equity.