NPS corporate debt funds outperform MFs over 5-year period

Out of seven NPS (National Pension System) fund managers with at least three years’ track record, only one managed to outperform its benchmark in the corporate debt category (Scheme C) for Tier-1 accounts. Birla Sun Life’s scheme C notched up 9.73 per cent return annually over three years, compared with its benchmark CCIL Bond Broad’s (Total Return Index) 9.38 per cent, Value Research as on September 25 shows. But NPS corporate bond schemes did much better than their mutual fund counterparts. The corporate bond category of mutual funds delivered 7.24 per cent over a three-year period on an average. Returns from the category over five years were 7.6 per cent.

Other pension funds’ schemes C delivered returns between 7.71 per cent and 9.23 per cent during the same period. While HDFC Pension Fund was second on the list after Birla Sun Life Pension Scheme with 9.23 per cent returns, Kotak Pension Fund was relegated to the bottom with 7.71 per cent.

Delivering over the long term

NPS is long-term investment vehicle specifically meant for creating a retirement corpus. And schemes C did turn in a much better performance over five years.

Four out of six pension fund managers with at least a five-year history beat the benchmark during this period. CCIL Bond Broad (TRI) recorded returns of 9.63 per cent annually over five years. HDFC Pension Fund was the chart-topper with 9.91 per cent returns, followed by ICICI Prudential Pension Fund at 9.76 per cent. SBI Pension Fund registered a 9.75 per cent return, while LIC Pension Fund (9.64 per cent) managed to beat the benchmark with a wafer-thin margin.

The five-year returns have tapered down compared to the schemes’ performance in August and September but continue to remain healthy. Even the two schemes that underperformed were just shy of the benchmark returns. UTI Retirement Solutions and Kotak Pension Fund yielded 9.42 per cent and 9.08 per cent respectively during the period.