Use rolling returns to select consistent tax-saving funds

They can help you remove the biases induced by the use of point-to-point returns

  • Point-to-point returns, widely used to judge a fund’s performance, convey the picture only at a given point of time 
  • If the fund has not done well at certain points in the past, that is not captured
  • Use rolling returns to overcome this bias 
  • We calculated the three-year return at monthly periodicity over a five-year period for all equity-linked savings schemes (ELSS)
  • Of the 60 data points (less in case of funds started later), we checked what percentage of times they were ahead of their benchmarks
  • The funds included have beaten their benchmarks 90 per cent of the time or more
  • Average returns given are average of three-year returns over 60 periods (months)
  • If you are looking at consistent performers, this sample is a good starting point for selecting ELSS funds
Note: Funds are growth options of regular funds, except Quantum, whose direct fund has been used; * Percentage of times the fund outperformed its benchmark; Source: Ace MF; Data as on April 27, 2017

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