Performance Measurement of Selected Equity Linked Savings Schemes

Abstract

“Equity Linked Savings Schemes (ELSS)” are equity funds that invest in a variety of industries and market capitalization classes (large, mid, and small caps). These funds strive to maximise the wealth of investors over the long term. The exemption under the Income Tax Act of 1961 (Section 80C) is capped at Rs. 150000 for the required three-year lock-in period. However, under the new income tax framework, investors will no longer benefit from Section 80C and other provisions. It might harm the chances of all Section 80C instruments, including ELSS. The imposition of a Long Term Capital Gain tax may reduce individual investors' inclination to participate in ELSS. Against this backdrop, the main objective of the research paper is to assess the performance of the selected ELSS using a variety of metrics. The research relies on secondary data. December 2009 to December 2019 is included in the study's time frame. The study considers ELSS which have been in operation for more than ten (10) years and have more than Rs. 10,000 crore in assets under management (AUM) as of December 31, 2019. Three ELSS, “Aditya Birla Sun Life Tax Relief 96” (ABSLTR), “Axis Long Term Equity” (ALTE), and “Nippon India Tax Saver” (NITS), met the requirements and were chosen. Among the measures utilised are Compound Annual Growth Rate, Standard Deviation Sharpe Ratio, Jensen Alpha, Coefficient of Determination (RSQ), and Beta. ALTE outperformed the benchmark index in terms of “risk-adjusted return” throughout the study period. Throughout the testing period, ALTE fund managers demonstrated remarkable stock-picking abilities. Through sufficient diversification, the fund managers of the selected ELSS did an excellent job of minimising the unique or unsystematic risk. ALTE was the most conservative ELSS throughout the study. NITS remained the aggressive ELSS throughout the research period.