Picking the right fund manager in NPS is crucial.
Reason: They are actively managed.
So, there could be a significant difference in their performance in the long term.
But how should you choose the right NPS fund manager?
A thread ๐งตanalyzing their performances.
Reason: They are actively managed.
So, there could be a significant difference in their performance in the long term.
But how should you choose the right NPS fund manager?
A thread ๐งตanalyzing their performances.
As an investor, you primarily have the following investment choice.
1. Corporate bonds (Scheme C)
2. Govt bonds (Scheme G)
3. Equity (Scheme E)
You can also invest a small portion (up to 5%) in alternative assets like REITs, InvITs, etc.
1. Corporate bonds (Scheme C)
2. Govt bonds (Scheme G)
3. Equity (Scheme E)
You can also invest a small portion (up to 5%) in alternative assets like REITs, InvITs, etc.
Currently, there are 10 pension fund managers, with Axis Pension Fund being the latest entrant.
To help you pick the best fund manager, letโs dissect their performances in the three key asset classesโequity, corporate bond and government bond.
To help you pick the best fund manager, letโs dissect their performances in the three key asset classesโequity, corporate bond and government bond.
Letโs start with equity (Scheme E).
We took NIFTY 50 TRI as a benchmark to measure the performance of NPS funds.
And we found that almost all NPS Funds have underperformed the NIFTY 50 index.
Check table. ๐
We took NIFTY 50 TRI as a benchmark to measure the performance of NPS funds.
And we found that almost all NPS Funds have underperformed the NIFTY 50 index.
Check table. ๐
Interestingly, the returns of all NPS fund managers are very close to one another.
Nonetheless, HDFC Pension Management seems to stand out.
HDFC is the only fund that has outperformed NIFTY 50 in 7 years.
And it has been the most consistent as well.
See table. ๐
Nonetheless, HDFC Pension Management seems to stand out.
HDFC is the only fund that has outperformed NIFTY 50 in 7 years.
And it has been the most consistent as well.
See table. ๐
Nonetheless, NPS is not all about equity.
You also invest a sizable corpus in corporate debt and government debt.
Letโs look at their performance.
You also invest a sizable corpus in corporate debt and government debt.
Letโs look at their performance.
Govt Bond (Scheme G)
For this asset type, we took two debt fund categories that primarily invest in G-Secs to compare the performance
Result: NPS funds have outperformed their mutual fund counterparts
Among individual funds, LIC Pension Fund stands out, followed by HDFC
๐
For this asset type, we took two debt fund categories that primarily invest in G-Secs to compare the performance
Result: NPS funds have outperformed their mutual fund counterparts
Among individual funds, LIC Pension Fund stands out, followed by HDFC
๐
Corporate Bonds (Scheme C)
We took the Corporate Bond Fund category as the benchmark.
Here, too, NPS funds have done better than their mutual fund counterparts.
Among individual funds, ICICI Pru stands out in the long run. But HDFC and ABSL are doing better lately.
๐
We took the Corporate Bond Fund category as the benchmark.
Here, too, NPS funds have done better than their mutual fund counterparts.
Among individual funds, ICICI Pru stands out in the long run. But HDFC and ABSL are doing better lately.
๐
How do you pick the best NPS fund?
In NPS, you primarily invest in a mix of equity, corporate debt and government bonds.
And you can decide which asset you want to invest in the most or least.
Thus, your choice of fund manager should be driven by your preferred asset mix.
In NPS, you primarily invest in a mix of equity, corporate debt and government bonds.
And you can decide which asset you want to invest in the most or least.
Thus, your choice of fund manager should be driven by your preferred asset mix.
Opt for a fund manager based on the asset in which you will predominantly invest.
If you go for a higher allocation to equities, look at funds that have performed well in Scheme E.
The same holds for other asset types.
If you go for a higher allocation to equities, look at funds that have performed well in Scheme E.
The same holds for other asset types.
Every actively managed fund goes through periods of underperformance.
As an NPS investor, you get the option to change the fund manager once every financial year.
But donโt switch unless a fund manager underperforms for a long period (at least 2 years).
As an NPS investor, you get the option to change the fund manager once every financial year.
But donโt switch unless a fund manager underperforms for a long period (at least 2 years).
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