We review the performance consistency of HDFC Pension Fund Scheme E – NPS TIER I measured against Nifty 50 TRI and UTI Nifty 50 TRI. The scheme was launched in Aug 2013 and currently has an AUM of little over Rs. 15 thousand crores- the highest AUM in the E segment for non-govt. subscribers.
In a previous article, we listed the investment policy of NPS equity schemes, which behave like actively managed large and mid cap funds: Is the NPS Equity Scheme an index fund?
Therefore it is right to determine how often these funds outperform their benchmarks (BSE 100 or BSE 200). The Nifty 50 is an equivalent accessible benchmark. We first reviewed the performance of SBI Pension Fund Scheme E – NPS TIER I.
Disclaimer: Fund performance reports present return and risk analysis of a fund with representative benchmarks and not investment recommendations. It must be expressly understood that the data below reflect only past performance and is in no way an indication of future performance.
We shall use the Rolling return outperformance consistency to gauge performance. The fund returns are compared with category benchmark returns over every possible 1Y,2Y,3Y,4Y, and 5Y period. Higher the outperformance consistency, the better. Suppose 876 fund returns were compared with 876 benchmark returns, and the fund has beaten the benchmark 675 times. The consistency score will be 675/876 ~ 77%. All data are as of 29th August 2022.
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HDFC Pension Fund Scheme E – NPS TIER I vs Nifty 50 TRI & UTI Nifty 50 TRI
One year
| Metric | UTI Nifty 50 | Nifty 50 TRI |
| No of rolling return entries Index (1 Year) | 1960 | 1960 |
| No of rolling return entries Fund (1 year) | 1960 | 1960 |
| No of times fund outperformed the index (1 year) | 1198 | 1081 |
| rolling return outperformance Consistency Score (1 year) | 61% | 55% |
Two years
| Metric | UTI Nifty 50 | Nifty 50 TRI |
| No of rolling return entries Index (2 Years) | 1719 | 1719 |
| No of rolling return entries Fund (2 years) | 1719 | 1719 |
| No of times fund outperformed the index (2 years) | 1118 | 962 |
| rolling return outperformance Consistency Score (2 years) | 65% | 56% |
Three years
| Metric | UTI Nifty 50 | Nifty 50 TRI |
| No of rolling return entries Index (3 Years) | 1476 | 1476 |
| No of rolling return entries Fund (3 years) | 1476 | 1476 |
| No of times fund outperformed index (3 years) | 956 | 713 |
| rolling return outperformance Consistency Score (3 years) | 65% | 48% |
Four years
| Metric | UTI Nifty 50 | Nifty 50 TRI |
| No of rolling return entries Index (4 Years) | 1236 | 1236 |
| No of rolling return entries Fund (4 years) | 1236 | 1236 |
| No of times fund outperformed the index (4 years) | 762 | 513 |
| rolling return outperformance Consistency Score (4 years) | 62% | 42% |
Five years
| Metric | UTI Nifty 50 | Nifty 50 TRI |
| No of rolling return entries Index (5 Years) | 995 | 995 |
| No of rolling return entries Fund (5 years) | 995 | 995 |
| No of times fund outperformed the index (5 years) | 759 | 482 |
| rolling return outperformance Consistency Score (5 years) | 76% | 48% |
Unfortunately, that is a poor performance vs Nifty 50 for a non-index that wants to “maximise returns”. Given the constraints of the NPS, we must appreciate that this is just about as good as it gets for NPS schemes!
The HDFC T1 E fund has done better than the SBI T1 E fund versus UTI Nifty 50 (see link above). That, of course, does not make a pension fund with mandatory lock-in and annuity restrictions a better buy than UTI Nifty 50 Index fund!
We recommend avoiding equity (scheme E) in your NPS portfolio! Unless your employer contributes to the NPS and you have a permanent job, it makes little sense to invest in the NPS. See: Stay away from Corporate NPS if You Wish to Retire ASAP!