85% of ELSS Funds Beat the Benchmark — But Are They Really Consistent?

When it comes to tax-saving investments, Equity Linked Savings Schemes (ELSS) often top the list. They’re popular because they not only help you save taxes under Section 80C of the Income Tax Act, but also give you the potential to grow your money faster than traditional options like PPF or fixed deposits.

And here’s the headline that recently caught everyone’s attention:
85% of ELSS funds outperformed the Nifty 500 TRI over the last five years.

Sounds fantastic, right? But before you rush to invest, let’s dig a little deeper. Because, as with most things in the stock market, there’s more to the story than meets the eye.

What Does “85% Beat the Benchmark” Really Mean?

According to Value Research Online, nearly 26 out of 31 ELSS funds managed to deliver higher returns than the Nifty 500 Total Return Index (TRI) over the past five years. On average, these funds gave returns above 19.4% per annum, compared to the index.

On the surface, this paints a very strong picture for ELSS investors. If almost every fund manager is beating the benchmark, it seems like you can’t go wrong by picking any ELSS scheme.

But here’s the catch: these figures are based on point-to-point returns. That means they only compare the NAV (Net Asset Value) of funds at the start of the five-year period and at the end.

And as investors, we all know markets don’t move in a straight line. What looks great on paper can feel very different if you entered at another point in time.

Also Read :- Flexi Cap, Multi Cap, or Value: Best Fund for Long-Term?

Why Rolling Returns Tell the Real Story

This is where rolling returns come in. Unlike point-to-point returns, rolling returns look at all possible overlapping time periods. For example, instead of just checking returns from January 2019 to January 2024, you check every single 5-year block during that period — Feb 2019 to Feb 2024, Mar 2019 to Mar 2024, and so on.

This method smooths out the ups and downs of the market and gives a much clearer picture of consistency.

And when you apply rolling returns to ELSS funds, the story changes quite a bit.

• The Nifty 500 TRI delivered an average rolling return of around 15.8%.
• The average ELSS fund only did slightly better, at around 16.1%.
• Most importantly, only 12 out of 26 direct-plan ELSS funds consistently beat the index.

That means while the headline says 85% outperformed, the real figure for consistent outperformers is closer to 46%.

Why This Matters for You

As an investor, you don’t just want to know whether a fund did well in one fixed period. You want to know:

• How reliable is it across different market conditions?
• Will it protect me when the market is choppy?
• Does the fund manager add long-term value, or was it just lucky timing?

This is why rolling returns matter. They separate the lucky winners from the skilled performers.

Think of it like cricket: if a batsman scores 100 runs in one match, it looks amazing. But if in the next 10 matches, he only scores 10 runs each, would you still call him consistent? Rolling returns are like checking a batsman’s batting average, not just one century.

ELSS Still Beats Many Alternatives

Now, don’t get discouraged. Even with this twist, ELSS funds remain one of the best tax-saving investments for long-term wealth creation.

Here’s why:

• Lowest Lock-in: ELSS comes with just a 3-year lock-in, compared to 5 years for tax-saving FDs and 15 years for PPF.
• Equity Exposure: Unlike fixed-return products, ELSS lets you participate in India’s growth story through equities.
• Tax Benefits: You can claim up to ₹1.5 lakh deduction under Section 80C.

So even if not every ELSS fund is a consistent outperformer, the category as a whole remains attractive.

Also Read :- Top 5 ELSS Funds to Save Tax and Boost Wealth in 2025

How to Pick the Right ELSS Fund

Here are some simple tips to choose wisely:

1. Look Beyond Recent Performance
   Don’t just chase funds that gave the highest 1-year or 3-year returns. They may have just gotten lucky with timing.
2. Check Rolling Returns
   Many research platforms now provide rolling return charts. Pick funds that have consistently outperformed their benchmark across different periods.
3. Focus on Fund Houses with Discipline
   Choose AMCs (asset management companies) that have a track record of managing equity funds well, not just one-off winners.
4. Go for Direct Plans
   Direct plans have lower expense ratios, which means higher returns in the long run compared to regular plans.
5. Stay Invested for the Long Haul
   ELSS is an equity product. If you invest with just a 3-year horizon, you may be disappointed. Aim for at least 7–10 years to let compounding work in your favor.

Final Thoughts

The headline “85% of ELSS funds beat the benchmark” is exciting — but as investors, we must look deeper. Rolling returns show that true consistency is harder to find, with less than half of ELSS funds outperforming regularly.

That said, ELSS remains a smart choice for tax-savvy investors who want both savings and long-term wealth creation. The key is not to pick blindly, but to focus on consistency, fund house reputation, and your own long-term goals.

Because in the end, it’s not about winning once. It’s about staying ahead, year after year.