Best ELSS Mutual Funds to Invest in 2026

Equity Linked Savings Schemes (ELSS) are a popular category of mutual funds that offer the dual benefit of tax savings and long-term wealth creation. These funds primarily invest in equities and come with a mandatory lock-in period of three years. Under Section 80C of the Income Tax Act, investments in ELSS are eligible for tax deductions of up to ₹1.5 lakh per financial year.

As one of the most efficient tax-saving options available, ELSS not only helps reduce your taxable income but also provides an opportunity to participate in the growth potential of the stock market. However, the tax benefits under Section 80C are only available if you choose the old tax regime.

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Let’s explore what makes the best ELSS mutual funds a compelling investment choice.

SBI ELSS Tax Saver Fund

This fund towers over the pack with a whopping ₹32,328 crore AUM, reflecting massive investor trust in SBI Mutual Fund’s stewardship. Its 1.57% expense ratio keeps costs in check for regular plan holders, making it cost-effective for long-term SIPs or lump-sum investments aimed at tax saving.

Delivering an impressive 23.9% three-year return, the fund focuses on a diversified equity portfolio with a strong tilt toward large-cap stocks, particularly in financials and IT. It aims for steady capital appreciation while navigating market cycles with a proven track record of outperformance.

Motilal Oswal ELSS Tax Saver Fund

Managing ₹4,444 crore AUM, this fund strikes a balance between size and agility. The 1.82% expense ratio supports its high-conviction investment strategy focused on quality growth stocks across market caps.

With 23.2% three-year returns, it has excelled by concentrating on sectors such as consumer goods and industrials, rewarding patient investors seeking tax benefits alongside strong wealth compounding.

HDFC ELSS Tax Saver

With ₹17,244 crore AUM, HDFC’s ELSS fund remains a preferred choice among tax-saving equity schemes. Its relatively low expense ratio of 1.7% enhances net investor returns.

The fund follows a disciplined multi-cap strategy, emphasising blue-chip stability while selectively investing in mid-caps. Its 21.71% three-year return reflects consistent performance through market volatility.

WhiteOak Capital ELSS Tax Saver Fund

With a smaller AUM of ₹451 crore, this fund adopts a growth-oriented approach backed by active management, reflected in its higher 2.33% expense ratio.

It delivered 21.36% three-year returns by focusing on high-potential sectors like technology and healthcare. The fund suits investors comfortable with boutique fund houses and relatively higher volatility.

HSBC ELSS Tax Saver Fund

HSBC’s ELSS fund manages ₹4,186 crore in AUM with an expense ratio of 1.9%. It offers a diversified equity mix leaning toward large- and mid-cap stocks.

With 20.95% three-year returns, the fund balances risk and growth through exposure to banking, pharma, and energy, supported by disciplined risk management.

DSP ELSS Tax Saver

DSP ELSS manages a sizable ₹17,573 crore AUM with a competitive expense ratio of 1.61%. It recorded 20.57% returns over three years.

The fund focuses on quality large-cap stocks complemented by tactical exposure to mid- and small-caps, prioritising downside protection alongside steady compounding.

ITI ELSS Tax Saver

With ₹441 crore AUM and a 2.28% expense ratio, ITI ELSS follows an active investment approach.

It delivered 20.42% three-year returns by focusing on financial services, industrials, and automobiles, making it suitable for aggressive investors seeking higher growth potential with tax benefits.

JM ELSS Tax Saver Fund

JM ELSS, with an AUM of ₹228 crore, carries a higher expense ratio of 2.37% but compensates with an 80%+ equity allocation.

Its 20.3% three-year return comes from concentrated positions in mid- and small-cap stocks, appealing to investors comfortable with volatility in pursuit of higher absolute returns.

BARODA BNP PARIBAS ELSS Tax Saver

This fund manages ₹953 crore in AUM with a 2.22% expense ratio. It posted solid three-year returns of 20.01%.

The fund follows a flexible equity strategy across market caps, with exposure to consumption, infrastructure, and technology, blending global research expertise with local market insights.

Conclusion

ELSS funds remain among the most tax-efficient investment vehicles for long-term wealth creation, combining Section 80C benefits with equity exposure through a relatively short three-year lock-in period.

The funds highlighted above have consistently delivered strong double-digit returns while maintaining diversified portfolios across market capitalisations. When choosing an ELSS fund, investors should consider factors such as expense ratio, fund management quality, sector allocation, and investment philosophy.

Whether you prefer the stability of large-cap oriented funds or the growth potential of mid- and small-cap focused strategies, ELSS funds provide a proven path to tax-efficient investing while participating in India’s long-term equity market growth.