Motilal Oswal ELSS Tax Saver Fund has topped its category with a 21.5% three-year CAGR, significantly outperforming its benchmark. While the fund leads in long-term rankings, market data shows leadership varies across shorter timeframes. Investors should consider the mandatory three-year lock-in and market risks before making decisions based on performance rankings.
The Motilal Oswal ELSS Tax Saver Fund has emerged as the top performer in the Equity Linked Savings Scheme (ELSS) category based on three-year compound annual growth rate (CAGR) data as of August 2026. The fund delivered a 21.5% return, placing it ahead of peers like the HSBC ELSS Tax Saver Fund and Quant ELSS Tax Saver Fund, which recorded returns of 17.4% and 15.9% respectively during the same period. These rankings consider only those funds with assets under management (AUM) exceeding ₹1,500 crore.
A key observation from recent performance data is the consistent outperformance of the Motilal Oswal fund against its benchmark, the Nifty 500 Total Return Index (TRI). While the fund achieved its 21.5% gain, the benchmark delivered 9.2% over the same three-year window. This margin demonstrates the fund's ability to generate returns above the broader market index over the medium term.
However, investors should note that leadership in the ELSS category is not fixed and changes depending on the time horizon. While Motilal Oswal holds the top spot for three-year returns, other funds have led in shorter durations. For instance, the Quant ELSS Tax Saver Fund has been a leader for one-year and three-month periods, while the HSBC ELSS Tax Saver Fund has performed well over one-month windows. This variability highlights the importance of not judging a fund solely by its ranking in one specific time period.
The data also clarifies that a larger fund size does not automatically translate to higher returns. The SBI ELSS Tax Saver Fund, which commands a significant corpus of over ₹32,300 crore, reported a three-year CAGR of 15.8%. This is lower than some of its smaller peers in the category, suggesting that investors should look beyond just the size of the fund's assets when evaluating performance.
Investors must keep in mind the specific nature of ELSS funds, which come with a mandatory three-year lock-in period. This restriction means capital cannot be withdrawn immediately, regardless of market performance or ranking changes. Additionally, equity investments are subject to market volatility, and changes in taxation, such as the Long Term Capital Gains (LTCG) tax of 12.5% on gains exceeding ₹1.25 lakh, will impact the net returns for investors. When assessing these funds, investors may track long-term performance consistency, the expense ratio (which currently sits around 2.11% for the regular plan), and how the fund manager adapts to changing market cycles.