NPS Returns for 2020 – Who is best NPS Fund Manager?

Many of us investing in NPS (National Pension Scheme). But have you ever checked NPS Returns for 2020? Whether you analyzed who is the best NPS Fund Manager for 2020 or which is the best NPS Scheme for 2020?

NPS now slowly turning to be one of the major investment choices for many of us. It may be due to the default option provided to Government employees, tax benefits at the time of investment or to create a retirement corpus.

What is Scheme Preference in NPS Account

In NPS, there are two types of options available to create your portfolio. They are as below. Remember this scheme preference is not available for Government Employees Tier 1 Account Type. However, they have the freedom to choose scheme preference in their Tier 2 account. For rest of all investors, you have an option to choose scheme preference.

# Active choice – You will decide on the asset classes in which the contributed funds are to be invested and their percentages (Asset class E-Maximum of 50%, Asset Class C, and Asset Class G ).

Auto choice – Lifecycle Fund– This is the default option under NPS and wherein the management of investment of funds is done automatically based on the age profile of the subscriber. At the age of 18 years, the auto choice will invest 50% of pension wealth in E Class, 30% in C Class and 20% in G-Class. These ratios of investment will remain fixed for all contributions until the participant reaches the age of 36 yrs. From age 36 yrs onwards, the weight in E and C asset class will decrease annually and the weight in G class will increase annually till it reaches 10% in E, 10% in C and 80% in G class at age 55 yrs.

At the age of 18 years, the auto choice will invest 50% of pension wealth in E Class, 30% in C Class and 20% in G-Class. These ratios of investment will remain fixed for all contributions until the participant reaches the age of 36 yrs. From age 36 yrs onwards, the weight in E and C asset class will decrease annually and the weight in G class will increase annually till it reaches 10% in E, 10% in C and 80% in G class at age 55 yrs.

Such changes will be done on the birth date of the subscriber. Such changes can be done once in a financial year.

What are the types of funds available in NPS?

There are three types of NPS funds available. They are as below.

  1. Asset Class E : Invest in equity market instruments. This is the riskier asset class among all three.
  2. Asset Class G : Invest in fixed income instruments. The best example of this is the central government bond. This is secured among all three.
  3. Asset Class C : Invest in fixed income instruments. Examples of these are bonds issued by firms or companies. this neither risky like Asset Class E nor safe like Asset Class G.

Recently a new fund category by name Alternate investment has been introduced.

List of NPS Fund Managers

Currently, there are 8 Fund Managers who are managing our NPS corpus and they are as below.

  1. Birla Sun Life Pension Scheme
  2. HDFC Pension Fund
  3. ICICI Prudential Pension Fund
  4. Kotak Pension Fund
  5. LIC Pension Fund
  6. SBI Pension Fund
  7. UTI Retirement Solutions

The Government employees NPS accounts and contributions are managed by LIC Pension Fund, SBI Pension Fund and UTI.

Under this category, up to 15% of the corpus can only be invested in Equity Fund. The remaining corpus is allocated to Corporate Bonds and Govt securities.

The private sector employees and other individuals can also invest in NPS. The Equity fund threshold limit is 75% in this case. These individuals can select any of the two investment options to select scheme preferences.

NPS Tax Benefits 2019

Many of us invest in NPS mainly because of tax saving options. But sadly many fail to understand the different sections one can avail by investing in NPS.

I am explaining the same from the below image.

NPS Tax Benefits 2020 - Sec.80CCD(1), 80CCD(2) and 80CCD(1B)

I have written a detailed post on this. You can refer the same at “NPS Tax Benefits 2020 – Sec.80CCD(1), 80CCD(2) and 80CCD(1B)

NPS Returns for 2020 – Who is the best NPS Fund Manager?

Now let us concentrate on NPS Returns for 2020 and try to find who is the best NPS Fund Manager for 2020 or which is the best NPS fund for 2020.

NPS Returns for 2019- Best NPS Fund under Central Government Scheme

As I said above, this scheme is meant for Central Government Employees only. Here, we can find only three fund managers and the returns are as below.

NPS Returns for 2020- Best Fund Manager Central Government Scheme

# Notice that for all the return considerations like 1 yr, 3 yrs, 5 yrs , 10 yrs and since inception, SBI Pension Fund beating LIC and UTI.

# Their debt holding mainly invovled long term Gsec ranging from 2029 maturity to 2044. Hence, they may be safe with default or downgrade risk, but prone to interest rate movements.

NPS Returns for 2020- Best NPS Fund under State Government Scheme

Now let us go with NPS Returns for 2020 under State Government Scheme. Here also you will find 3 fund managers like central government NPS. Let us see the performance.

NPS Returns for 2020- Best Fund Manager State Government Scheme

# Here also SBI Pension Fund leading the performance chart for all 1 Yr, 3 Yrs, 5 Yrs, 10 Yrs and since inception.

# Their debt holding mainly invovled long term Gsec ranging from 2029 maturity to 2044. Hence, they may be safe with default or downgrade risk, but prone to interest rate movements.

NPS Returns for 2020 – Best Performing NPS Tier 1 – Scheme E Fund Returns

Now let us concentrate on NPS Returns for 2020 in Tier 1 Scheme E. The returns are as below.

# Here, for short term views like 1 Yr, 3 Yrs and 5 Yrs, HDFC Pension Fund looks good. However, if you are looking for long term view like 10 Yrs and since inception, then Kotak, ICICI and UTI looks better.

# All fund managers top 5 holdings around 33%. Also, Finance is common top holding among all of them.

# I suggest HDFC and UTI Fund Managers in this category.

NPS Returns for 2020 – Best Performing NPS Tier 1 – Scheme C (Corporate) Fund Returns

NPS Returns for 2020- Tier 1 C Scheme

# Why the returns are around 13% since one year? The reason is falling interest rate and these fund managers holding long term maturing bonds.

# Surprising to see that SBI Fund Manger holding DSP Overnight Fund. That listed one among top 5 holdings of the portfolio. Strnage but we can’t get the answer as usual. Because there is no such defenition of what should be the portfolio structure, risk appetite and other stuffs.

# I suggest HDFC Fund Manager and ICICI Fund Manager in this category.

NPS Returns for 2020 – Best Performing NPS Tier 1 – Scheme G (Govt Securities) Fund Returns

Now let us look for NPS Returns for 2020 in NPS Tier 1 and Scheme G (Govt Securities).

NPS Returns for 2020- Tier 1 G Scheme

# Notice the returns of all fund managers since a year. It is almost more than 16%. The major reason for this is that they are all holding long term government securities and due to interest rate falling, they are generating higher returns.

# Again in this category also, SBI Pension Fund holding an overnight fund. But here HDFC Overnight Fund. This fund is one among top 5 holdings of the fund manager. Strange but realities.

# LIC is the best performer in this category.

NPS Returns for 2020 – Best Performing NPS Tier 2 – Scheme E Fund Returns

Let us now move to Tier 2 performance of NPS Returns 2020.

# Here, Kotak, SBI and HDFC are doing good.

# Majority of their holding in top 5 categories are finance.

NPS Returns for 2020 – Best Performing NPS Tier 2 – Scheme C (Corporate) Fund Returns

Now let us concentrate on NPS Returns for 2020 in Tier 2 Scheme C. The returns are as below.

NPS Returns for 2020- Tier 2 C Scheme

# The suspicious act of SBI Fund Manager continues here too. Here, the fund manager holding the Axis Overnight Fund. This again forms the part of top 5 holdings of the portfolio.

# Here, HDFC, LIC and and Kotak doing good.

NPS Returns for 2020 – Best Performing NPS Tier 2 – Scheme G (Govt Securities) Fund Returns

Let us not check the NPS Returns for 2020 for Tier 2-Scheme G (Government Securities).

# Here also SBI Fund Manager holding the Axis Overnight Fund and it again the part of Top 5 holdings of the portfolio.

# As usual, LIC is best performer in this category.

Who is the best NPS Fund Manager for 2020?

In the above charts we the NPS Returns for 2020. Now based on those performance returns, who is the best NPS Fund Manager?

In the below chart, I show you the highest return generated fund manager for each asset class for a different time period of 1 year, 3 years and 5 Yrs returns. The data looks like below.

NPS Returns for 2020 - Who is the best NPS Fund Manager

Hope this much information is enough for you to judge how your NPS is performing. Do remember that NPS comes with lock-in, annuity you buy will be taxable and you have to stick to limited fund managers. Never invest in NPS with the sole intention of tax saving.

Refer our other posts related to NPS:-

Conclusion:-Returns may look fantastic. However, the concern is liquidity, no clarity on portfolio disclosure and taxation are not favorable at the time of withdrawal. Hence, I strongly suggest you to stay away from such product. You noticed that how SBI Fund Manager investing in different AMCs Overnight Mutual Funds and that also forms the part of Top 5 Holdings. No clarity makes risky for me to consider such invesment.

Refer our latest Posts:-

14 Comments

  1. Hi Basu
    I have gone through NPS Asset allocation for different type of risk profiles. Planning to implement the the same AA followed by LC75 – Aggressive Life Cycle Fund.
    For my current age(36) – Equity recommended as 71% and remaining to debt portions.
    Do we have to invest Asset class C and G as mentioned in NPS or just have single Asset class or mix of C and G.
    Asset class E- Index funds
    Asset class C – ???? No idea which products to consider.
    Asset class G – PPF/EPF/Gilt funds.

    As time goes by, plannning to follow recommended AA by this model and finally the Equity will be 15%.
    Kindly share your views, or any post covered in this AA model.

    Reply
  2. You may please add the below:

    1. Different fund managers can be selected for Tier 1 and Tier 2.

    2. But only one fund manager can be chosen to manage assets within a particular tier e.g. If HDFC pension fund is chosen then all Equity, Corporate, Govt securities in Tier 1 will be managed by HDFC only. It is not possible to chose HDFC for Equity, UTI for Corporate, ICICI for Government.

    3. Considering the above, it is prudent to select a fund manager based on overall performance in Equity, Corporate and Government securities instead of a single category. Further, the asset allocation percentage chosen by subscriber should be considered too.
    E.g. I have Equity:Corporate in Tier 1 with 75:25 percent allocation. I like UTI fund for Equity and HDFC fund for Corporate. As my Equity allocation is higher, I selected UTI as my fund manager. So, UTI manages my both Equity and Corporate assets in Tier 1 for me.

    The table you gave at the end for “Who is the best NPS Fund Manager for 2020?” contradicts with your suggestions in the article in multiple categories. E.g. You suggested UTI and HDFC for Tier 1 Equity however Kotak and HDFC are listed in the table. Is it intentional?

    Reply
    • Dear Sreekanth,
      1) and 2) It is a procedural aspect, which I don’t wish to highlight all features in one post. Instead, my concentration here is returns.
      3) Asset allocation also varies based on your risk appetite and I don’t wish to suggest a standard format.
      4) Yes, it may vary as returns the respective fund managers may be best. But I have chosen based on my comfortable also.

      Reply
  3. Considering that different Fund Managers are giving different returns in each category,is it possible to have separate Fund Manager for separate categories?

    Reply
  4. Sir, now the equity markets are at low and we can expect further 10-15% down. I am a central government employee, how can I switch to equity in my NPS tier 1 account to get those benifits for long time and are these instruments are flexible to switch at any time? Please guide. Thank you.

    Reply
    • Dont go for switch,i switched this time and surprice twist is they liquidated all that date and made fresh investment … I thought they will do this year fresh investment as my preference choosen!!

      Kindly dont use auto choice its not beneficial..i dont know weather you people got my point,tongatti sir may explain better in his next blog with easy sentence,if he got my point!

      Reply
      • Dear Ranjan,
        If they completely move, then what loss in that? Can you explain?

        Reply
  5. Why returns as on 28th February have been reported in April while the market is thru turmoil. Please report returns as on 31st March and see the downfall.

    Reply
  6. Can I choose (1) HDFC Fund manager for E , (2) HDFC Fund Manager for C and (3) LIC FUND MANGER FOR G , if yes , guide me step by step process how to do on line .

    Reply

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