The present study makes an attempt to compare large cap schemes and the Equity Linked Savings Scheme (ELSS) of four mutual funds to determine whether investment in large cap schemes is justified from a long-term perspective or ELSS could provide an ideal substitute for these schemes especially for a tax-savvy investor. The study compared the two categories of schemes on different formula based risk adjustment performance yardsticks which included popular traditional risk adjusted measures like Sharp, Treynor and Jensen ratios and alternative risk measures (downward risk/volatility measures). The funds selected were also compared against two benchmarks; one was the popular S&P CNX Nifty and second was the S&P 500, the broader index. The data has been collected as daily returns for these funds for the five-year period April 1, 2009 to March 31, 2014. The results of the study showed that performance of large cap funds has fallen short of the performance of ELSS funds when comparison was made on the above-mentioned yardsticks. The conclusion drawn is that the ELSS funds are not merely tools of saving tax under Section 80C of the Income Tax Act but also provide fairly decent returns over the long term period, which according to our results are even higher than the otherwise popular large cap funds.

Indian mutual fund industry has matured over the years; the funds have shifted their stand from general to specific schemes, i.e., they are now launching schemes which are fine-tuned/ tailor-made to meet the specific requirements of an investor (Shahani, 2014). Schemes have been launched successfully to cater to almost all types of investors; these schemes are designed according to the tastes and specific requirements of a class of investors (Kapoor et al., 2013). One such specific scheme which is popular amongst the investors especially the salaried class is the Equity Linked Savings Scheme (ELSS). ELSS is a scheme which offers potential for capital growth and income through investment performance (Jain et al., 2013). This performance in the capital growth is complemented in terms of tax relief which it brings to the investors under Section 80C of the Income Tax Act in the year of investment under this scheme.

Another type of specific scheme which caters to certain types of investors who wish to focus only on blue chip and popular stocks is the Large Cap Fund Scheme. A lot of investors who invest in capital markets want to focus on the companies which have been in existence for quite a few years and also have a good market capitalization in terms of number of shareholders and institutional investors. Therefore in order to cater to such type of investors, most funds have launched large cap schemes.

Financial Risk Management Journal, Comprehensive Evaluation, Large Cap, ELSS Funds, Equity Linked Savings Scheme (ELSS), International Studies, Risk Adjusted Performance Measures.