Mumbai, January, 2026.

While Indian investors have greater access to equity products than ever before, staying invested through market cycles remains a challenge. DSP Mutual Fund has outlined a perspective that reframes Equity Linked Savings Schemes (ELSS) not primarily as tax-saving instruments, but as products that can help address behavioural gaps in long-term investing.

With tax considerations under Section 80C becoming less relevant for a growing segment of investors, ELSS has seen reduced mindshare in recent years. DSP Mutual Fund believes, however, that the structural features of ELSS, particularly the mandatory three-year lock-in, continue to hold relevance, albeit for reasons beyond taxation.

“Investor outcomes are often impacted less by product selection and more by behaviour,” said Manish Rathi, Head – Consumer Growth Marketing, DSP Mutual Fund. “In periods of volatility, investors tend to exit early, chase momentum, or respond to short-term market noise. The lock-in feature of ELSS can help reduce these tendencies by encouraging investors to remain invested through cycles.”

DSP’s internal data indicates that the average holding period for digital, do-it-yourself equity investors is approximately 2.5 years, shorter than what is typically required for long-term wealth creation. In this context, ELSS, with its statutory three-year lock-in and diversified equity exposure functions similarly to a flexicap-style equity product in terms of construct and historical outcomes, while adding an element of enforced investment discipline.

“This makes ELSS relevant for today’s investor environment,”Rathi added.“When the natural inclination is to react to short-term market movements, a product structure that nudges investors to stay invested for longer can improve the probability of better outcomes.”

The perspective also challenges the traditional view of ELSS as a seasonal, lump-sum product concentrated around the January–March tax period. DSP Mutual Fund is encouraging investors to consider ELSS as part of a systematic investment plan (SIP) approach, allowing it to function as a year-round allocation rather than a tax-driven decision.

“Long-term investing tends to work best when it is structured and uninterrupted,” Rathi said.“SIPs into ELSS help introduce that structure, while the lock-in reduces the risk of premature exits during volatile phases.”

Through this initiative, DSP Mutual Fund aims to position ELSS as a practical behavioural tool for long-term equity investing, particularly for investors who struggle with consistency rather than as a product defined solely by tax benefits.