Equity-linked saving schemes (ELSSs), are highly diversified equity<\/a> funds that offer a dual benefit of capital appreciation over a long term due to investments in equity and tax rebate under Section 80C<\/a> (up to Rs 1.5 lakh) as well.\u00a0\u00a0 A distinguishing feature about ELSS<\/a>s is that they are subject to a compulsory lock-in period of 3 years, but the minimum application amount in most of them is as little as Rs 500, with no upper limit.<\/p>\n\n\n\n [Read<\/strong>: Should You Be Investing in ELSS At The Beginning Of The Financial Year?<\/a>]<\/p>\n\n\n\n ITI Mutual Fund will adopt a differentiated\napproach of portfolio construction that will be benchmark agonistic, to manage\nrisk during bullish and bearish market scenarios. As mentioned by the fund\nhouse, under normal circumstances the fund will be at least 90% invested in\nequities. Its typical portfolio construction would include 40-70 stocks. <\/p>\n\n\n\n For the purpose of allocation between Large,\nMid and Small Cap segments it will follow a unique internal research-driven\nprocess which is based on valuation, expected earnings growth, market and\nbusiness cycles. Allocation towards market cap segments will be based on the relative\nattractiveness of the segments and can vary between 0% to 100%. <\/p>\n\n\n\n Since the scheme will invest more than 80%\nof its total assets in equity and equity-related securities. So, from a\nrisk-return standpoint, ITILEFF is a high-risk high-return investment\nproposition. <\/p>\n\n\n\n Graph: Risk\nreturn curve of equity funds<\/em><\/strong><\/p>\n\n\n\n (PersonalFN research)<\/p>\n\n\n\n On the risk-return curve, an ELSS fits in-between value funds<\/a> and focused funds. So, do note that although an equity-linked saving scheme comes with some safety element of large caps<\/a>, they also carry the risk associated with mid<\/a> and small caps<\/a> and have a mandatory lock-in period of three years.<\/p>\n\n\n\n Hence investors should consider investing in an ELSS only if their risk appetite permits, i.e. it is high, and if the investment time horizon is at least 3 years. In the long-term, if you intend to create wealth<\/a>, then a tax-saving fund could potentially clock lucrative inflation-adjusted returns if the portfolio construction is done astutely and risks are managed well.<\/p>\n\n\n\n [Read:\u00a0<\/strong>Why Comparing Returns to Risk Is More Meaningful!<\/a>]<\/strong><\/p>\n\n\n\n You can do either lump sum investments or\ninvestments through a Systematic Investment Plan (SIP). In the case of the latter,\neach instalment has a 3-year lock-in period. Both individuals and HUFs are\nentitled to invest in ELSS.<\/p>\n\n\n\n [Read<\/strong>: Which Are The Best ELSSs (Tax Saving Funds) For 2019?<\/a>] <\/p>\n\n\n\n Table1: Details\nof <\/em><\/strong>ITI Long Term\nEquity Fund<\/em><\/strong><\/p>\n\n\n\n![\"\"](\"http:\/\/blog.certifiedfinancialguardian.com\/wp-content\/uploads\/2019\/07\/Risk-return-curve-of-equity-funds.png\")
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