ELSS Tax Saver Funds in 2026: Motilal Oswal, SBI and HDFC Funds Explained for Long-Term Investors
ELSS Tax Saver fund schemes are still the most-preferred tax-saving method for investors who look to pair their Section 80C’s income deduction with long-term wealth creation via equity assets. ELSS (Equity Linked Savings Scheme) funds provide just the right balance of flexibility and growth potential, as it has the least lock-in period, three years, among tax-saving investment options. Among the host of others, Motilal Oswal Tax Saver Fund, SBI Tax Saver Fund and HDFC Tax Saver Fund are among the top return earners. But when compared over longer periods, there will be significant leadership changes, so it’s important not to get too caught up in headline returns, and look at risk-adjusted returns, consistency and portfolio strategy before committing.
Performance Chart: Shifting Leadership in Different Time Frames
On the surface at least, all three funds are strong performers, but their ranking relative to each other is very different depending on investment horizon.
Motilal Oswal ELSS Tax Saver Fund is the topper in three-year returns at 24.18 percent which is first under performance among 36 ELSS schemes. SBI Tax ELSS Saver Fund is at the second position with a 23.97 per cent return, and HDFC Tax Saver Fund stands third by giving a return of 21.73 per cent.
The table turns when we compare this over five years, and HDFC becomes the topper, giving 21.14 per cent return. The second position is occupied by SBI at 20.93%, followed by Motilal Oswal at 20.31%.
On the ten-year aggregation, once again, Motilal Oswal is at the top-end, which justifies that this multi-cap fund has the potential to offer long-term returns. SBI is on rank four, and HDFC stands fifth. What is striking from this rotation through timeframes, however, is a great lesson for investors: leadership in the short term doesn’t necessarily accrue and translate into long-term success.
Consistency and Risk Matter More Than Rankings
And while return rankings are often the focus of investor attention, they represent only part of the picture. Since these funds are equity-based and sensitive to volatility, consistency along with risk-adjusted performance becomes crucial.
A fund giving high returns with high risk need not be suitable for everyone, especially if he or she is investing in it only to avail of tax benefits to the extent of moderate risk. Metrics like standard deviation, beta, alpha and Sharpe ratio provide a more complete picture of how the fund manages the risk-reward tradeoff across market cycles.
Motilal Oswal Tax Saver Fund
The Motilal Oswal ELSS Tax Saver Fund was started in January 2015, and it adopts a high-conviction, concentrated investment style. This approach enables the fund manager to take aggressive bets on specific stocks and themes, which can result in a sharp outperformance during favourable market cycles.
The fund has a standard deviation of 19.01 and a beta of 1.22, which suggests that it is more volatile than peer funds. Yet that risk has paid off with a high alpha generation of 5.29, which represents significant outperformance to the benchmark (NIFTY 500 TRI).
The portfolio is at variance with benchmark-heavy funds, thanks to investments in MCX, Piramal Finance, Muthoot Finance, One97 Communications and Waaree Energies. This basic but unique approach makes the fund a good fit for more-aggressive investors, as well as those with long time horizons who can stick it out despite market gyrations.
SBI Tax Saver Fund
Launched in January 2013, the SBI ELSS Tax Saver Fund is among the largest equity-linked saving schemes with an asset under management (AUM) of over ₹32,600 Crore. The fund, in spite of its very high risk profile, has shown reasonably consistent performance over the years.
Its standard deviation stood at 12.78 percent and its beta was 0.95, less volatile than Motilal Oswal. SBI too scores high on risk-adjusted parameters with Sharpe ratio topping at 1.33, that’s not all, Sortino ratio is also a good 2.10, and so does the strong alpha, which comes in at 7.60.”
The fund takes a diversified and large-cap biased approach with HDFC Bank, Reliance Industries, ICICI Bank, Tata Steel, ITC, Cipla and Mahindra & Mahindra being its top holdings. This combination of size, diversification and performance makes the SBI Fund a reasonable choice for investors looking at stability in this category.
HDFC Tax Saver Fund
Another January 2013 launch, the HDFC ELSS Tax Saver Fund has an investment approach which is a little more conservative than its peers. It hews to high-quality large-capitalisation stocks and seeks slow compounding, not exaggerated outperformance.
The fund’s standard deviation of 10.87% and beta of 0.82 are the lowest across the three, signalling its lower volatility characteristic. Robust Sharpe (1.33) and Sortino ratios (2.19) highlight effective risk management, and 6.29 alpha suggests that these returns are not simply due to an upward-trending index trajectory.
The portfolio exhibits a strong bias towards the financial sector, with top stocks being HDFC Bank, Axis Bank, ICICI Bank, Kotak Mahindra Bank and SBI Life Insurance in addition to holdings in Maruti Suzuki, Bharti Airtel and HCL Technologies, which is why HDFC is most apt for investors who seek stability and consistency in return profile.
Why These Tax-Saving Funds Suit Long-Term Investors
There are many advantages of ELSS Tax saver funds that set them apart from all other tax-saving investments. The following are a few aspects why anyone should invest in:
- Tax benefit on Rs 1.5 lakh under Section 80C
- Lowest lock-in period of three years as compared to other tax-saving options
- Long-term wealth creation through equity participation
- Ability to provide returns that would outpace rising inflation in the long run
- But ideally, the investors should stay invested even after the lock-in period, say five to ten years or even more, to take advantage of compounding and tide over market turbulence.
Selecting The Right ELSS: Not One Size Fits All
Clearly, no single fund is the best in any timeframe and risk profile if we compare Motilal Oswal, SBI or HDFC ELSS Tax Saver Funds. Motilal Oswal is best suited for investors who are willing to take the risk and want higher long-term gains. If you’re looking to strike a balance between the scale, diversification and consistency of growth, consider SBI. HDFC suits investors seeking steady compounding with relatively lower volatility.
Instead of just running after chasing the recent performance, investors need to consider their risk appetite, time horizon and financial goals before selecting a ELSS Tax saver fund. In equity investing, especially in ELSS schemes, patience and alignment matter a lot more than the short-term ratings.
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