NPS Returns for 2019 – Who is best NPS Fund Manager?


Many of us investing in NPS (National Pension Scheme). But have you ever checked NPS Returns for 2019? Whether you analyzed who is the best NPS Fund Manager for 2019 or which is the best NPS Scheme for 2019?

NPS now slowly turning to be one of the major investment choices for many of us. It may be due to 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. Reliance Capital Pension Fund
  7. SBI Pension Fund
  8. 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 2019 - 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 2019 – Sec.80CCD(1), 80CCD(2) and 80CCD(1B)“.

NPS Returns for 2019 – Who is best NPS Fund Manager?

Now let us concentrate on NPS Returns for 2019 and try to find who is the best NPS Fund Manager for 2019 or which is the best NPS fund for 2019.

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 2019- Best NPS Fund under Central Government Scheme

# Fund Managers managing the scheme since 1st April 2008.

# SBI Manages the highest AUM (38,804.26 Cr) followed by UTI (36,894.41 Cr) and LIC (34,357.17 Cr).

# When you compare 10 years returns, SBI tops with almost 10% returns (9.86%) and then LIC and UTI almost generated around 9.5% returns.

#All Fund Managers debt portfolio hold Govt Bonds which maturing from 2030 to around 2045. Hence, any interest rate fluctuation will impact the return badly. Because of longer the maturity period higher the interest rate impact on bond.

# Top 3 holdings of SBI Fund Manager is G-Sec, Banking and Financial Institutions. LIC Fund Manager holding is Govt. Sec, Finance, Banks. However, with UTI, it is Banks, Other credit granting, Housing credit Institutions.

# Benchmark return for 5 years is 10.05%, 3 years is 8.27%, 2 years is 6.65% and for 1 year it is 9.07%. Hence, all three fund managers have beaten the benchmark consistently for 5 years.

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

Now let us go with NPS Returns for 2019 under State Government Scheme. Here also you will find 3 fund managers like central government NPS. Let us see the performance.

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

# Fund Managers managing the scheme since 25th June 2009.

# SBI Manages the highest AUM (54,585.94 Cr) followed by UTI (53,521.21 Cr) and LIC (52,644.86 Cr).

# When you compare 9 years returns, LIC tops with 9.56% returns and then UTI (9.5%) and SBI (9.46%).

#All Fund Managers debt portfolio hold Govt Bonds which maturing from 2030 (UTI holding bond maturing in the year of 2029) to around 2045. Hence, any interest rate fluctuation will impact the return badly. Because of longer the maturity period higher the interest rate impact on bond.

# Top 3 holdings of SBI Fund Manager is G-Sec, Banking, and Financial Institutions. LIC Fund Manager holding is Govt. Sec, Finance, and Banks. However, with UTI, it is Banks, Other credit granting, Housing credit Institutions.

# Benchmark return for 5 years is 10.05%, 3 years is 8.27%, 2 years is 6.65% and for 1 year it is 9.07%. Hence, all three fund managers have beaten the benchmark consistently for 5 years.

NPS Returns for 2019 – Best Performing NPS Tier 1 – Scheme E Fund Returns

Now let us concentrate on NPS Returns for 2019 in Tier 1 Scheme E. The returns are as below.

NPS Returns for 2019- Tier 1 E Scheme

# The best performing NPS Pension Fund manager under NPS Tier-1 Scheme E is HDFC PF. This scheme has generated returns of around 13.22% in the last 5 years. Also, since inception, it is 15.02%.

# Also, weightage of top 5 holdings is less in case of UTI. It constitutes 27.52% of the overall portfolio.

# Last year Kotak Fund was holding Mutual Funds like Birla Sunlife Top 100, Birla Sunlife Frontline Equity and SBI Magnum Multiplier. Seems strange to me as how they managing the expenses. Because there will be double expenses like Kotak expenses and also the Mutual Fund Expenses. But this time, I think they reduced their exposure or not holding. Hence, I have not seen this in the NPS report.

# The clear winner in this category is HDFC followed by UTI.

NPS Returns for 2019 – Best Performing NPS Tier 1 – Scheme C (Corporate) Fund Returns

Now let us concentrate on NPS Returns for 2019 in Tier 1 Scheme C. The returns are as below.

NPS Returns for 2019- Tier 1 C Scheme

# The best performing NPS Pension Fund manager under NPS Tier-1 Scheme C is ICICI. This scheme has generated returns of around 10.10% in the last 5 years. Also, since inception, it is 10.33%.

# SBI’s AUM is highest here with around 1,572.49 Cr followed by HDFC (1,232.35 Cr) and ICICI (834.05 Cr).

# The clear winner in this category is ICICI followed by SBI.

NPS Returns for 2019 – Best Performing NPS Tier 1 – Scheme G (Govt Securities) Fund Returns

Now let us look for NPS Returns for 2019 in NPS Tier 1 and Scheme G (Govt Securities).

NPS Returns for 2019- Tier 1 G Scheme

# In this category, the higher and consistent performer is LIC.

# Have you noticed the higher returns of all these funds for a year? The reason for underperformance by all these funds is that easing interest rate since a year or so. Due to this, the fund performance increased drastically. Because these funds holding longer maturity Government bonds which are prone to interest rate movement.

NPS Returns for 2019 – Best Performing NPS Tier 2 – Scheme E Fund Returns

Let us now move to Tier 2 performance of NPS Returns 2019.

NPS Returns for 2019- Tier 2 E Scheme

# The best performing NPS Pension Fund manager under NPS Tier-1 Scheme E is SBI. This scheme has generated returns of around 12.81% in the last 5 years. Also, since inception, it is 9.7%%.

# The clear winner in this category is SBI followed by UTI.

NPS Returns for 2019 – Best Performing NPS Tier 2 – Scheme C (Corporate) Fund Returns

Now let us concentrate on NPS Returns for 2019 in Tier 2 Scheme C. The returns are as below.

NPS Returns for 2019- Tier 2 C Scheme

# In this Scheme the winner is ICICI pension fund with 5 years return 9.98% and followed by Reliance Pension Fund.

# The highest AUM is managed by SBI Pension Fund and followed by ICICI Pension Fund.

NPS Returns for 2019 – Best Performing NPS Tier 2 – Scheme G (Govt Securities) Fund Returns

Let us not check the NPS Returns for 2019 for Tier 2-Scheme G (Government Securities).

NPS Returns for 2019- Tier 2 G Scheme

# In this category the winner is LIC.

Who is the best NPS Fund Manager for 2019?

In the above charts we the NPS Returns for 2019. Now based on those performance returns, who is the best NPS Fund Manager? To identify the best NPS fund manager, I considered the last 5 years returns of each scheme.

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 2019 - 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:-





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