From a regulatory standpoint, all mutual funds (including ELSS Funds) are extremely safe. Mutual Funds are structured as a trust, with the unit holders as the ultimate beneficiaries of the trust. Having said that, it’s important to know that ELSS Funds invest into stocks, and the stock market can be volatile. What this means is that your fund value could fluctuate in the short term, and your returns will not be linear, unlike those from FD’s and PPF. However, by investing via SIP’s and by holding on for the long term, risks associated with equity investing tend to get smoothed out.