What is the difference between diversified equity scheme and ELSS? Which one is more secure and profitable?
Ravi Dayal, Chandigarh
Both, diversified equity schemes and ELSS are equity schemes and both diversify across stocks and sectors. The only difference between a diversified equity scheme and an ELSS is that the latter offers tax benefits under Section 80C and comes with a three-year lock-in. Diversified equity funds do not offer such tax benefits and, therefore, do not come with a three-year lock-in. Closed-end diversified equity funds do come with a lock-in. However, they offer an exit window at periodic intervals, but with no Section 80C tax benefits. As both are diversified equity schemes, one category is not necessarily better or worse than the other. Stick to well-managed funds that come with a good, long term track record.
