Nifty 50 vs ELSS MF

[SankeshPai]

Hello guys,

I have one question. Hope to find an answer here.

I had started an SIP in nifty 50. Soon after came to know about ELSS MF for tax saving. So currently I have a SIP for both nifty50 and Elss MF. I just checked the common stocks for both, it says that the stocks overlap percentage is 50% ie almost 50% of stocks are common in both MF.

I need advice on how I should go ahead with this. Should I keep investing in both MF?
Or If I should stop investing in one, which one should it be?
The two MF are UTI NIFTY50 and MIRAE ELSS.

 

[zafar]

It's generally recommended to continue investing in both the Nifty 50 and ELSS mutual funds, despite the 50% overlap in underlying stocks. This provides better diversification and allows you to benefit from the tax advantages of the ELSS fund.

However, if you want to reduce exposure to one fund, it may be better to stop the SIP in the Nifty 50 fund and focus on the ELSS fund. This allows you to maximize the tax benefits and potentially higher returns from the actively managed ELSS fund, while still maintaining passive exposure to the Nifty 50 index through other investment options.

Ultimately, the decision should be based on your specific investment objectives, risk tolerance, and overall portfolio composition. It's advisable to consult a financial advisor who can provide personalized guidance to help you make the best decision for your financial
goals.