We all investing in NPS and assume that it is managed by PFRDA. But the reality is that there are some fund managers who manage your money. Hence, it is important for you to understand the NPS Returns for 2017 and who is the best NPS Fund Manager?
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 a 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.
There are three types of NPS funds available. They are as below.
Now let us see what are the returns of NPS for 2017. I am updating this information as of 28th April 2017.
Below is the chart of the same.
You notice that one-year returns of all funds are more than 20% due to the best-performing equity market. But I am eyeing for 5 years and since inception returns. In those categories, UTI, Kotak, and HDFC performed well.
The Benchmark returns of these schemes returns are as below.
1 Yr-21.21%. Only four funds beaten this and they are SBI, UTI, Kotak and HDFC beaten this benchmark.
2 Yrs-8.25%. All funds have beaten the benchmark easily.
3 Yrs-13.53%. Except for LIC, rest of all funds beaten this benchmark.
5 Yrs-13.42%. All funds have beaten this 5 years benchmark easily.
Below is the chart of the same.
Scheme C funds performed well even for 3 years and 5 years returns. However, if we consider the period of since inception, then the worst performing funds are Reliance and UTI. Rest of other funds given us the return of around 11% since inception.
The Benchmark returns of these schemes returns are as below.
1 Yr-10.68%. Only three funds beaten this and they are ICICI, Reliance, and Kotak.
2 Yrs-10.18%. Except for SBI and UTI, rest of all funds beaten this benchmark return.
3 Yrs-12.18%. Only ICICI fund gave the return. Rest of all funds underperformed.
5 Yrs-10.75%. All funds have beaten this 5 years benchmark easily.
Below is the chart of the same.
The Benchmark returns of these schemes returns are as below.
1 Yr-10.47%. Except for UTI, all other funds easily have beaten the benchmark.
2 Yrs-9.76%. Four funds have beaten the benchmark and they are SBI, LIC, Reliance and Kotak.
3 Yrs-12.44%. Only HDFC failed to beat this benchmark. But rest of all funds easily achieved this.
5 Yrs-10.43%. Only UTI failed to beat this benchmark. But rest of all funds easily achieved this.
Below is the chart of the same.
The Benchmark returns of these schemes returns are as below.
1 Yr-21.21%. Except for ICICI, all other funds easily have beaten the benchmark.
2 Yrs-8.25%. All funds have beaten this benchmark easily.
3 Yrs-13.53%. Four funds have beaten this benchmark (SBI, UTI, ICICI and Kotak).
5 Yrs-13.42%. All funds have beaten this 5 years benchmark easily.
Below is the chart of the same.
The Benchmark returns of these schemes returns are as below.
1 Yr-10.68%. Except for SBI and UTI, all other funds easily have beaten the benchmark.
2 Yrs-10.18%. Only ICICI and HDFC funds were able to beat the benchmark.
3 Yrs-12.18%. Sadly all funds failed to beat the benchmark.
5 Yrs-10.75%. Only ICICI fund was able to beat the benchmark. All other funds failed to beat.
Below is the chart of the same.
The Benchmark returns of these schemes returns are as below.
1 Yr-10.47%. Except for HDFC and UTI, all other funds easily have beaten the benchmark.
2 Yrs-9.76%. Only SBI and LIC funds were able to beat the benchmark.
3 Yrs-12.44%. Except for HDFC funds, all other funds have beaten the benchmark easily.
5 Yrs-10.43%. Only UTI fund failed to beat the benchmark.
In above charts we the NPS Returns for 2017 (as on 28th April 2017). Now based on those performance returns, who is the best NPS Fund Manager? To identify the best NPS fund manager, I considered last 3 years returns of each scheme. I purposely avoided 5 years returns as two funds not yet completed 5 years.
In below chart, I show you the highest return generated fund manager for each asset class for a different time period of 1 year, 2 years and 3 years. The data looks like below.
You notice that in a case NPS Returns for 2017 for both Tier 1 and Tier 2 “E” type of account, HDFC and UTI Pension Fund Mangers did well than others.
Same way, NPS Returns for 2017 for both Tier 1 and Tier 2 “C” type of account, ICICI and Kotak did well. Only for Tier 2 account, HDFC’s returns for 2 years are best.
Also, NPS Returns for 2017 for both Tier 1 and Tier 2 “G” type of account, no one can beat the LIC Fund Manager.
Considering all these data, I may assume that for “E” type of account, HDFC and UTI are Best Fund managers. For “G” type of account, I go with ICICI and Kotak. But for “G” type of account, LIC seems best.
Do remember that this selection of fund is based on some random numbers. We can’t judge specifically that who is BEST. Because they are not so old to judge based on past performance. You can check the monthly NPS Returns at NPS Portal.
Hope the above information will help you in judging the best NPS fund manager and tracking your NPS returns.
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View Comments
Sir I made mistake by investing in NPS 4 YEARS BACK as I was unknown to all other products And not know to financial planning and your blog also lol. So I can read about nps .
So after 4 year it is given me -2.89 return.
Sir my question is can we use this as. Our debt fund. Stay away from E invest in pure Equity Mf . Is it good idea to do that
Dear Vikram,
Better to stay away from debt part of NPS also. It is also not completely risk free.
I am united bank of India employee , started investing in NPS from SEP 2015 at the age of 43 year.till now almost RS 350000 invested. The rate of return is very poor. It is almost 4.5 percentage. My fund manager is lic and fund named is lic pension pension fund.can any body reply how it so lower than even bank interest.
Dear Raj,
Which option you have selected?
Sir my nps tier1a/c shows it's corporate scheme I chose auto choice, under which my fund manager is sbi pension corporate scheme, but initially in2016 nov it showed 14% returns while it reduced at present to 2% it doesn't even seem better than pf , so should I change scheme of tier1. My age is25
Dear Ashutosh,
In Equity related product this the beauty and risk also. If you are uncomfortable with such volatility then better not to invest.
Hello Sir,
I've been investing in NPS since 4 yrs now primarily for Tax purpose (Only employee contribution). The % distribution of funds are as below. Scheme E - ICICI Pru Pension Fund- 50% Scheme C - ICICI Pru Pension Fund - 40% Scheme G - ICICI Pru Pension Fund - 10%. I read in one of the article that even though maximum % allocation is capped at 50% for equity fund, we can still do away with that by investing in LC-75, which is by selecting Auto choice and allocating 70% to equity. Please let me know how can I do that & be more aggressive to reap the maximum benefit.
Regards,
Nikhil
Dear Nikhil,
Regarding enhancing your exposure, be in touch with PFRDA POS and request them for the same. By the way, do you feel investing in any product or asset just for the sake of tax saving is the best investment strategy?
Hi,
Thanks for your comments. I do have many investments in MF, both in equity-linkee and debt funds. I also need to save tax, hence NPS was an added option. R my funds in each category OK or any change needed? Please advise.
Dear Nikhil,
I am still asking the same question. Do you feel investing in NPS for the sake of tax saving is best strategy? Refer to my recent post "National Pension Scheme (NPS) – 5 Biggest Disadvantages".
Hello,
I have changed NPS fund manager from ICICI to HDFC.But the fund which i have already invested not shifted still it shows me ICICI.Please guide me what i have to do now.
Dear Vaskar,
Approach PFRDA POS.
I invested in ICICI PRUDENTIAL PENSION FUNDS MANAGEMENT COMPANY LIMITED PFM with
E : 50.0% | C : 30.0% | G : 20.0% |
It has given negative return
Should I change anything before investing for this year?
Sweta-Negative return of month, quarter, year or 5 years?
Today its showing 2 % profit for 1 year. Not negative
Sweta-If you can't digest such equity volatility, then better to stay away from any equity product.
-1.30% was in February 2018 . I invested in November 2017
Hi Sir,
I have started investing in NPS Tier-1 through my employer and have chosen HDFC Pension Fund management with Aggressive Auto Choice LC-75 (75% Equity , 10% Corporate, 15% Government Bonds) as I under 35 years and want more equity exposure. Now I switched to Birla Sun Life considering it to give good returns than HDFC, do you think this is a good choice ? Please suggest !!
Anup- Changing Fund Manager especially in NPS may not help that much. Instead you have to change asset allocation.
Hi,
Can you publish similar analysis for the next FY ?
Thank!
Akshay- Yes, surely.
Hi Basu for 2018 , whos is the best NPS fund manager , NPS fund fall under which kind of invessment I mean we have debt, equity , is it another type and seprate from regular investments !
Shahnawaz-Let me write the post on this. It is part of debt and equity as your investment is spread between these two.
My Age 51 Years, I want to start NPS of RS.50000/- Annually. Please advise in section of best Fund Manager.
Vishnu-You can select any fund manager of your choice. You noticed that there is no such huge difference.