mid- or large-cap tax-saving fund?

Though all equity diversified funds that offer a tax break are classified as ELSS – which is an acronym for Equity Linked Savings Schemes, all of them are not the same in terms of portfolio construction. It would be a grave investing error to assume that all funds in this category are similar.

Since they are actively managed, the fund manager has the leeway to decide on what must comprise his portfolio. It could be a large-cap oriented fund or a mid-cap oriented one or even a flexi-cap fund. One fund's investment mandate will not be the same as the other.

For instance, Mirae Asset Tax Saver has around 72% of its portfolio in large caps, HSBC Tax Saver has around 34% in mid and small caps, and Edelweiss ELSS has 44% of its portfolio in mid and small caps.

If you are looking for a mid-cap fund, then search for a tax-saving fund which has such exposure to smaller fare. If you prefer playing it safe with large caps, then search for such portfolios accordingly.

But remember, the only similarity you can take for granted is that they are open ended, actively managed equity funds that have a lock-in period of three years. The rest is up to the portfolio manager.