Tax Saving in Mind? Choose ICICI Pru Long Term Equity Fund for a Long-Term

Launched on 19th Aug 1999, this is an ELSS scheme with AUM of Rs 5,607 crore (as on 31st Dec 2018). ICICI Prudential Long Term Equity Fund aims for long-term capital appreciation and tax saving benefits by investing in equity and equity-related instruments. Under section 80C of Indian Income Tax Act, 1961, the investors can get tax deduction benefits by investing in ELSS and other options on an invested amount of Rs 1.5 lakh. Apart from this, investors can also utilise potential long-term benefits by investing in equity securities. As it is an ELSS scheme, you have to stay invested for at least 3-years to make investment matured. However, investing over 3-years also beneficial to create wealth over a long-term horizon. Factors Making it One of the Best Schemes in ELSS Category: Investment Strategy This scheme has an allocation in favour of diversification across the market capitalization. Therefore, ICICI Long Term Equity Fund will contain a portfolio consisting a mix up of small, mid, and large cap stocks. However, the fund manager is free to change the portfolio allocation across capitalization time to time depending on different market conditions to keep his promise. The lock-in of 3-years helps the fund manager to choose the stocks with a long-term aim as there is no risk of redemption, so, it will provide an opportunity to create wealth over a time horizon. This scheme follows the value investment style where the focus is on underpriced stocks to generate superior returns over a long duration. With this investment approach, during the unfavourable market conditions, it underperforms the benchmark and category’s average but sustains higher returns over a long-term horizon as well. Fund Manager For the last 3.5-years, Mr George Heber Joseph had been managing this scheme quite well as he is an experienced fund manager of 13-years in the industry. But, from 5th Nov 2018 onwards, the lead is transferred to Harish Bihani who has more than 10-years of experience in handling equity schemes. Along with Sankaran Naren, Mr Bihani is handling the scheme at present. With good leadership, it is certain that ICICI Prudential Long Term Equity Fund has the potential to provide required tax savings benefits and long-term capital gain. Current Portfolio Allocation In the current market situations, it has a moderately riskier portfolio, but it has a defensive allocation as well to handle the downturn. The overweight sectors in the portfolio now are NTPC and ITC, and underweight sectors are cement and oil. According to the fund manager, the value investment style is significant in the current market conditions as well because it has managed the current market meltdown pretty well which is witnessed from the last 6-months and 1-years performance. In the recent market downturn, the benchmark and category have lost money in the recent period, but it has sustained this volatility favouring one of the best ELSS schemes in this category. Past Record Since inception, it has produced 19.99% annualised returns (as on 30th Jan 2019). In last 3, 5, 7, and 10-years, ICICI Prudential Long Term Equity Fund has produced 10.10%, 15.86%, 15.24%, 20.48% CAGR, respectively. During unfavourable market conditions in 2008, 2011 and 2018, it has maintained the losses below the benchmark and category’s average and recovered with the next market bull cycle as well. Why Should You Invest Now? As only a few months left for tax deductions, investors can invest in this scheme at one go to save maximum taxes. Apart from this, as this scheme is appropriate for a long-term investment, investors can start investing now to get tax savings benefits for the next year and stay invested for a long term through SIP. With the analysis based on the past record, portfolio construction, fund manager, and investment strategy, the investor can start investing in this scheme for a long-term and utilise capital appreciation option. If you have still not invested in any scheme to save taxes, you are required to start investing now with the help of a financial adviser. This article mentions the reasons making ICICI Prudential Long Term Equity Fund one of the best ELSS schemes in the category.