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ELSSs or equity linked saving schemes that help to save taxes are not favoured by many investors these days. CNBC-TV18.com spoke to experts and found out these reasons:
Equity-linked savings scheme (ELSS) mutual funds traditionally have been considered by investors as part of Section 80C allocation. Since the provident fund and insurance could not address the entire exemption allocation of Rs 1.5 lakh, investors chose ELSS funds as it also provides the advantage of investing in equity while addressing their tax exemption needs.
However, trends suggest that this investment scheme is losing its sheen lately. The total assets under management (AUM) of the ELSS category has seen a decline.
The AUM of ELSS funds by the end of the 2020-21 fiscal was at Rs 1.47 lakh crore and, over the last six months, it saw net flows of a meagre Rs 2,353 crore. These flows are starkly lower than other equity schemes, which saw net flows of at least Rs 11,000 crore each.