# I've to invest in ELSS for 80C tax saving. Which fund(s) should I pick?

When it comes to ELSS, present categorization gives the fund managers wide berth in picking stock from NSE 500 universe of stocks. They can pick any stock from top 500 stocks listed in NSE / BSE - this is different from funds that are categorized as large-cap, mid-cap, small-cap, or multi-cap funds.

This makes it tricky to pick an ELSS fund.

You can look at past returns, or metrics derived from past returns; but all these won't indicate how a fund would perform in next similar time duration.

If a fund had 4% alpha on its benchmark over last 4 years; it's no indication of what kind of alpha it would have going into next 4 years.

Active fund picking is hard, and ELSS having widest latitude can be really hard to pick the right fund that'd perform great after you invest in that.

For instance, until 2015-16, Nippon ELSS used to be one of the popular recommendation on many mutual fund portals. Since then, next 3-4 years haven't been kind to this fund, owing to this fund's huge bets on infrastructure / manufacturing sectors.

Conversely, Axis Long Term Equity has done better than expected over the same period.

In 2020, Canara Robeco ELSS fund looks like a great fund, doing much better than its peers over last 3-4 years. But 3-4 years ago, or even a year ago, it wasn't doing anything extraordinary, that it'd get into anyone's radar.

The harsh truth is, you can pick an ELSS fund, and at best hope for it to do well-enough. We've discussed before how picking the right fund isn't exactly a big requirement - if you pick something that does ok enough, that's fine.

ELSS investment is already capped at 1.5L per year. On top of this, most salaried workers have PF, insurance etc., limiting ELSS investments to much lower value. If the investment principal is small, return difference isn't that important.

Just pick one, you're as likely to be wrong as you could be lucky.

###### tags: `FAQs`