National Pension Scheme (NPS): Returns generated by Pension Fund Managers

Since I published the returns my National Pension Scheme (NPS) holdings have generated, I have received several requests to post returns generated by the pension fund managers for the general public. In this post I publish SIP returns generated by UTI and Kotak pension fund managers for general investor accounts.

First an update on NPS returns for Central Govt. subscriptions (that is my account :))

NPS-mar-2014

 

These funds have only 15% equity and mostly government debt. Therefore, they are still recovering from the July 2013 bonds crash.

A cagr of 7.6% is pretty decent considering the time frame and the possibility of higher returns.

If I take into account my equity CAGR of ~ 10% (all holdings July 2008 to present), generated with my automated mutual fund and goal tracker,  and a PPF of ~ 8%, my retirement folio is pretty healthy.

Now for the other fund managers

The general public can choose fund managers from

Getting NAV history is extremely painful and in some cases a nightmare. From the NAV history, it appears that DSP BR, HDFC, LIC, Reliance and ICICI(?) have started operations for general investors quite recently (about a year or so). So  I have not considered them in this post.

The oldest pension fund managers for general investors appear to be Kotak, UTI and SBI as data is available from mid 2009.  It is extremely painful to get data from SBI. So I have analysed NAV history from Kotak and UTI alone in this post.

Graphical views of HDFC pension fund NAV history can be obtained here.

Each AMC responsible for fund management has three schemes:

Scheme E: equity

Scheme G: Government debt/bonds

Scheme C: Corporate debt/bonds

Here are the compositions of the UTI NPS schemes

NPS Trust - A/c UTI Retirement Solutions Pension Fund Scheme C – Tier I

Fund Size (February 28, 2014) : Rs. 12.84Cr
Date of Inception : May 21, 2009
Annualised Return since Inception as on February 28, 2014 : 8.60% (CAGR)
Component of AuM: Asset Class (Break up)  As On February 28, 2014
Actual % of AUM

  • (a) Debt Securities (b) Term Deposits Receipts (c) Rupee Bonds 93.31%
  • Money market Instruments including money market mutual funds 2.09%
  • Others 4.60%

NPS Trust - A/c UTI Retirement Solutions Pension Fund Scheme E – Tier I

Fund Size (February 28, 2014) : Rs. 18.77Cr
Date of Inception : May 21, 2009
Annualised Return since Inception as on February 28, 2014 : 9.25% (CAGR)
Component of AuM: Asset Class (Break up) As On February 28, 2014
Actual % of AUM

  • Money market Instruments including money market mutual funds 7.69% 
  • Equity Shares of Companies or Mutual Funds Equity Schemes 92.35%
  • Others (0.04%)

NPS Trust - A/c UTI Retirement Solutions Pension Fund Scheme G – Tier I

Fund Size (February 28, 2014) : Rs. 18.37Cr
Date of Inception : May 21, 2009
Annualised Return since Inception as on February 28, 2014 : 6.28% (CAGR)
Component of AuM: Asset Class (Break up)  As On February 28, 2014
Actual % of AUM

  • (a) Govt. Securities  (b)Other Securities unconditionally guaranteed by Central or any State Govt. (c) GILT Mutual Funds regulated by SEBI 96.81% 
  • Money market Instruments including money market mutual funds 1.34%
  • Others 1.85%

I have calculated returns using Tier I NAV history assuming a SIP runs from inception. Results with relevant investment details were generated with my mutual fund SIP account statement generator

NPS-results

Given the circumstances (economic conditions, weak rupee) and considering the low fund management fees, these returns are pretty decent if not spectacular.

Here is the NAV history of  the UTI schemes:UTI-NPS

Notice that the corporate debt scheme has done pretty decently has quickly recovered from the July 2013 bonds crash whereas the Government debt scheme is yet to recover.

My NPS has more of G-securities than C-securities 🙁

What you think of these returns? Are you considering investing in the NPS?

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35 thoughts on “National Pension Scheme (NPS): Returns generated by Pension Fund Managers

  1. VINAY MAITHANI

    Yes i was thinking about NPS as one of the instruments for my retirement corpus. However as you said data is not so much available. I am still unable to comprehend which PFM to choose. I am making my opinion based on this link http://articles.economictimes.indiatimes.com/2013-09-09/news/41903687_1_nps-funds-national-pension-scheme-nps-schemes
    AND
    http://www.business-standard.com/article/pf/steady-returns-from-nps-113091900179_1.html
    that is the case of general public and not central govt employees 🙂

    Your recommendation here would help me to take a call sooner

    Reply
  2. VINAY MAITHANI

    Yes i was thinking about NPS as one of the instruments for my retirement corpus. However as you said data is not so much available. I am still unable to comprehend which PFM to choose. I am making my opinion based on this link http://articles.economictimes.indiatimes.com/2013-09-09/news/41903687_1_nps-funds-national-pension-scheme-nps-schemes
    AND
    http://www.business-standard.com/article/pf/steady-returns-from-nps-113091900179_1.html
    that is the case of general public and not central govt employees 🙂

    Your recommendation here would help me to take a call sooner

    Reply
  3. John Galt

    NPS for corporates has additional tax concessions over the 1L 80C limit. I assume your calculations don't take that into account - can you make a calculator that takes this additional tax exemption into account to calculate the CAGR?

    Reply
    1. pattu

      In my case I receive this tax advantage and reinvest the tax deduction. So the numbers I quote for my folio include this. I believe this is the right way to include the tax deduction: make an actual investment and calculate. Otherwise if you make a calculator, results will simply reflect the inputs.
      The idea here is to show absolute fund manager returns.

      Reply
  4. John Galt

    NPS for corporates has additional tax concessions over the 1L 80C limit. I assume your calculations don't take that into account - can you make a calculator that takes this additional tax exemption into account to calculate the CAGR?

    Reply
    1. pattu

      In my case I receive this tax advantage and reinvest the tax deduction. So the numbers I quote for my folio include this. I believe this is the right way to include the tax deduction: make an actual investment and calculate. Otherwise if you make a calculator, results will simply reflect the inputs.
      The idea here is to show absolute fund manager returns.

      Reply
  5. Ashal Jauhari

    Dear Vinay, if you still have debt exposure open beyond PPF, you may invest in a long term debt fund for retirement purpose.

    Reply
  6. Ashal Jauhari

    Dear Vinay, if you still have debt exposure open beyond PPF, you may invest in a long term debt fund for retirement purpose.

    Reply
  7. VINAY MAITHANI

    Dear Ashal. Before leaving for abroad, i did not have PPF account while i was in India, however based on your consistent advise on jagoinvestor forum i have now equity exposure for long term basis. Can you advise me long term debt fund ?

    Reply
  8. VINAY MAITHANI

    Dear Ashal. Before leaving for abroad, i did not have PPF account while i was in India, however based on your consistent advise on jagoinvestor forum i have now equity exposure for long term basis. Can you advise me long term debt fund ?

    Reply
  9. R Parikh

    The returns are based on NAV but guess there are charges which if they are deducted by cancelling units at NAV equal to the amount periodically the returns would be even lower? PFRDA should make it mandatory or else CRA NSDL should show comparative returns for any periods or point to point at a glance of all fund managers. What about various financial sites free like ET money control value research online ICICI direct HDFC Sec Kotak Sec etc does any of them have NPS also as part of portfolio?

    Reply
    1. pattu

      Yes I agree that entry load has to be accounted for. None of the financial portal track NPS funds

      Reply
  10. R Parikh

    The returns are based on NAV but guess there are charges which if they are deducted by cancelling units at NAV equal to the amount periodically the returns would be even lower? PFRDA should make it mandatory or else CRA NSDL should show comparative returns for any periods or point to point at a glance of all fund managers. What about various financial sites free like ET money control value research online ICICI direct HDFC Sec Kotak Sec etc does any of them have NPS also as part of portfolio?

    Reply
    1. pattu

      Yes I agree that entry load has to be accounted for. None of the financial portal track NPS funds

      Reply
  11. Mrs. Prasad

    HI,
    I want to get pension during my old age.. say 1 Lk to 2 Lk per month. I have seen LIC's plans and private insurers plan , they are too expensive.

    But, i doubt if by investing in NPS, i can achive above said goal.

    Reply
    1. freefincal

      Instead of pension you must think of inflation protected income. If your retirement is far away invest upto 60% in equity mutual funds. Stay away from NPS, LIC plans etc.

      Reply
  12. Mrs. Prasad

    HI,
    I want to get pension during my old age.. say 1 Lk to 2 Lk per month. I have seen LIC's plans and private insurers plan , they are too expensive.

    But, i doubt if by investing in NPS, i can achive above said goal.

    Reply
    1. freefincal

      Instead of pension you must think of inflation protected income. If your retirement is far away invest upto 60% in equity mutual funds. Stay away from NPS, LIC plans etc.

      Reply
  13. rvr

    HI,
    I want to get pension during my old age(now I am 40). say 40000 to 5000 per month. how much I need to invest ?
    Can I achieve it by investing in NPS,

    Reply
  14. rvr

    HI,
    I want to get pension during my old age(now I am 40). say 40000 to 5000 per month. how much I need to invest ?
    Can I achieve it by investing in NPS,

    Reply
  15. Pavan

    I am 40 yrs & staretd NPS investment this year itself. Have I made a wrong decision...? Apart pension benefits whatever, hoping this investment reduces my tax obligation to some extent & benefits me rightaway.

    Reply
    1. Chetan

      I think if you are in 30% Tax bracket then you must go for NPS, as NPS is providing additional TAX benefit on your 50,000 Investment during the Financial year, so overall you can make saving of 15,000+ by investing in NPS. Yes its a long term, but in 30 % tax slab you do not have any other option to save more TAX. Hence NPS is the good available option, Share your input on this.

      Reply

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