ELSS funds with Liquid Funds
ELSS FUNDS with LIQUID FUNDS creates a smart hybrid strategy that blends tax-saving, liquidity, and portfolio balance—perfect for your advisory style and blog audience. Let’s break it down into a structured, actionable framework.
🧠 Why Combine ELSS + Liquid Funds?
| Feature | ELSS Funds | Liquid Funds |
|---|---|---|
| 🧾 Tax Benefit | ₹1.5 lakh deduction under Section 80C | No 80C benefit, but tax-efficient if held >3 yrs |
| 📈 Return Potential | High (equity exposure) | Moderate (low-risk debt instruments) |
| 🔒 Lock-in Period | 3 years mandatory | No lock-in; T+1 liquidity |
| 🎯 Ideal Use Case | Long-term wealth + tax saving | Emergency fund, STP, short-term surplus |
This combo allows you to:
- Maximize 80C tax benefits with ELSS
- Maintain liquidity and manage short-term cash flow with Liquid Funds
- Stagger equity exposure using STP from Liquid to ELSS (if not doing lump sum)
🧩 Portfolio Structuring Ideas
🔹 Option 1: Balanced Hybrid Strategy
- 60% ELSS (e.g., Parag Parikh ELSS, SBI Long Term Equity Fund)
- 40% Liquid Fund (e.g., Axis Liquid Fund, Edelweiss Liquid Fund)
Use Case: Ideal for salaried individuals or HNIs who want tax savings + emergency buffer.
🔹 Option 2: STP-Based Entry
- Park ₹1.5 lakh in a Liquid Fund
- Set up a Systematic Transfer Plan (STP) into ELSS over 3–6 months
- Use Case: Reduces market timing risk, especially useful in volatile equity phases.
🔹 Option 3: Year-Round Tax Planning
• Start SIP in ELSS (₹12,500/month = ₹1.5 lakh/year)
• Maintain Liquid Fund for quarterly surplus or bonus inflows
Use Case: Smooth cash management + disciplined tax-saving investment
🧮 Tax Angle to Highlight
• ELSS: Gains taxed at 10% beyond ₹1 lakh LTCG, post 3-year lock-in
• Liquid Funds: Taxed as debt—20% with indexation if held >3 years
This makes Liquid Funds a tax-efficient parking tool for clients with surplus cash and long-term goals.
The top-performing ELSS (Equity Linked Savings Scheme) mutual funds in India as of 2025, based on 5-year CAGR and overall consistency. These funds not only offer tax benefits under Section 80C but also deliver strong equity-linked returns.
🏆 Top ELSS Funds (2025 Performance Overview)
| Fund Name | 5-Year CAGR | Fund Size (₹ Cr) | Risk Level |
|---|---|---|---|
| SBI Long Term Equity Fund | 23.86% | ₹30,271 | Very High |
| Parag Parikh ELSS Tax Saver Fund | 23.69% | ₹5,538 | Very High |
| Motilal Oswal Long Term Equity Fund | 24.23% | ₹4,402 | Moderately High |
| HDFC ELSS Tax Saver Fund | 22.04% | ₹16,579 | Very High |
| DSP ELSS Tax Saver Fund | 18.29% | ₹16,981 | Very High |
| Quantum ELSS Tax Saver Fund | 19.3% | ₹221 | Very High |
| Franklin India ELSS Tax Saver Fund | 20.24% | ₹6,706 | Very High |
🔍 What Makes These Funds Stand Out?
• SBI Long Term Equity Fund: Strong long-term track record, large AUM, diversified portfolio.
• Parag Parikh ELSS: Known for value investing and low churn, ideal for long-term wealth creation.
• Motilal Oswal ELSS: High alpha and consistent performance, though slightly higher expense ratio.
• HDFC ELSS: Popular among retail investors for its stability and brand trust.
💡 Advisor Tip: How to Use These Funds
• Lump Sum Investment: Ideal for claiming full ₹1.5 lakh 80C benefit at once.
• SIP Strategy: ₹12,500/month = ₹1.5 lakh/year, spreads market entry and builds discipline.
• STP from Liquid Fund: For clients wary of market timing, park in a liquid fund and stagger into ELSS.