NPS Fund Managers with the Highest Returns | Best NPS Managers 2023

[Music] the national pension system or NPS has emerged as a popular investment option for retirement over the last 10 years NPS assets have risen from just about 81,000 crores at the end of fi5 to about 10 lakh CR at September and fi 24 that's a growth of 28.4% perom the reason for this growth in popularity are pretty obvious you get tax benefits the costs are low and you can easily manage your NPS Investments now while investing in The NPS is an easy decision unfortunately which pension fund manager or pfm to choose is not that easy there are 10 pension fund managers available in The NPS and if you want more Bank from your retirement Buck you must choose the best fund manager for instance on average in any 5 years between September 2016 and September 23 the tier one Equity scheme of HDFC pension management has delivered 13.4% per anom Returns on the other hand the tier one Equity scheme of adya baa Sun Life pension management has delivered just 11.6% so the worth of 1 lakh invested during any of these 5 years would be around 1.88 lakh in case of scheme e of HDFC pension management while it will be worth around 1.73 lakh in case you opted for Equity scheme of adya beras pension management so choosing the right pension fund manager matters and that's what we will help you do in this video how well we will look at the performance of each fund manager in detail in this video but just like everything else we do on our Channel we have done something unique let me tell you what that is see it's not difficult to get past returns of pension fund managers but we have not just looked at past seven or any 10e returns we went a step further in this video we will look at the rolling return analysis of each fund manager and that's the unique part rolling returns give you a much clearer picture of a fund's performance and and this data or analysis is not readily available but before we start did you know that we've launched our WhatsApp Channel now you can get access to our most insightful content right on WhatsApp so look for it on WhatsApp and join it today I have also included a link to the channel in the description of this video now we will start with a brief introduction to NPS before we dig deeper into performance numbers if you would like to First understand The NPS and it features in Greater details we have a relevant video I have mentioned its Link in the description of this video now let's take a quick look at NPS and its [Music] features we will cover four important points here that are relevant to our analysis first let's talk about different NPS models now NPS has four models this include central government NPS state government NPS corporate sector NPS and all citizen NPS The NPS model we will cover is all citizen model this is The NPS model which is available to all Indian citizens and one can invest voluntarily in it that's why it is also called the voluntary NPS account now NPS offers two types of accounts there's a tier one account and also a tier two account the tier one account is the main account in which regular contributions made by the subscribers are credited and invested the tier two account is optional in this video we will talk about the tier one account only now if you want to invest in The NPS you can open an account and invest instantly without any paperwork on the etmoney app etmoney is also the only place where you can start sip in NPS and invest every month the second point that we want to highlight is about fund managers The NPS has 10 pension fund managers of pfms of these axis Max life and Tata are relatively new they started managing The NPS money only one or two years ago since we don't have much data for them this video will focus on the rest of the seven fund managers the third and the final aspect of NPS is the different asset classes The NPS offers four asset classes this includes Equity government bonds bonds and alternative investment funds the pension regulator denotes them as asset class e g c and a respectively now NPS also offers two investment choices active and auto the active Choice allows you to decide how much you want to invest your corporate across asset class e gcna subject to certain upper capping on the other hand the auto choices three predefined portfolios that adjust your allocation across three asset classes e GN c as per your age these portfolios are called life cycle funds do know that you don't have the option to invest in asset class A here so these were the some basics of The NPS let's now specifically talk about the performance of the schemes belonging to asset classes e g c and a under tier one of The [Music] NPS let's first look at the tier one Equity schemes these schemes invest predominantly in large cap stocks and for the analysis we looked at the average 5-year rolling returns what that means is that we have calculated returns across all possible fiveyear investment periods between September and 2016 and September and 2023 and then average them think of it like this we have taken the fiveyear returns of all the NPS investors between September and 2016 and September in 2023 and average them now the top three pension fund managers emerged to be sdfc icic and cotch they have delivered 13.4% 12.79% and 12.73% average fiveyear rolling returns respectively however none of the fund managers were able to beat the nifty50 index returns so we checked if any of the fund managers did better than the Nifty 100 index we found that the sdfc pension fund was the only one that did better than the Nifty 100 now while returns are one part of the equation the other part is volatility after all since equities are expected to be volatile it's worthwhile to see how the various fund managers have fared in terms of controlling volatility now to measure volatility we use a metric called a standard deviation the higher the standard deviation the higher the volatility now as you can see there is hardly any difference here so volatility isn't really a differentiator among NPS fund managers let's now take a look at the performance of the schemes belonging to asset class G that is government [Music] bonds these schemes invest in government bonds and these bonds tend to be of long duration so how do the fund manager is fair when we compare their average 5-year rolling Returns the top three fund managers here are LC sdfc and AD baa with the returns of 8.58% LC has done considerably better than its peer but we need to see how this fund managers have performed against a benchmark so we compare their performance to an index of government bonds it's called the ISC Sovereign Bond index it's one of the oldest and most well-known Government Bond indices and guess what all pension fund managers have performed better than the index all right now let's move to the looking at the performance of the schemes of asset class [Music] C these schemes are allowed to invest in copit papers rupee bonds Bank fixed deposits debt mutual fund schemes debt securi issued by reats and inits and infrastructure bonds and as per regulations the majority of their Investments have to be in bonds with at least ablea rating a small part can be invested in Securities rated double A minus 2 a now coming to the returns of these schemes with the returns of 8.29% 8.15% and 7.98% HDFC ad ba and SBI are the top three fund managers in this asset class now to see if these returns are good enough we compar it with the category average return of corporate bond funds as The Benchmark and what we found was that all fund managers have been able to deliver more than the corporate bond fund category average returns of 7.03% finally let's take a look at the schemes of asset class A or the alternative investment [Music] fund the schemes invest in alternative products like reads invits Perpetual bonds and so on for Simplicity most investors can do without this asset class and focus only on the remaining three in any case the allocation to asset class A is capped at 5% plus if you go for auto allocation this asset class is not available to you however if you want to experience alternative investing the chart on your screen shows the scheme a performance of various tier one fund managers with the returns of 9.45% SBI is the topper here SDF and LC come next with 8.79% and 7.93% returns there are no benchmarks returns here as this segment is not as standardized as the others so this was the performance of NPS schemes under various asset classes how can you use this data to select the best fund manager let's [Music] see NPS now allows you to pick different fund managers for different asset classes it means you can have for example sfc for Equity LC for government bonds and SBI for corporate debt or any other combination if you desire earlier this was not possible and one had to pick just one fund manager this has changed now but do know that for scheme a you will have to choose one of the three fund managers that you choose for other schemes so if you have SD FC LC and SBI for scheme EG GNC you can't have say Ad B for scheme a it has to be any one of sdfc LC and SBI only so if you want better returns from your NPS Corpus all you need to do is choose the best fund managers across asset classes of course you will need to keep a tab on the performance of various schemes and make changes if a fund manager un performs consistently now the current rules allow you to change your pension fund managers once in a financial year but what if we want to keep it simple and don't want to choose different fund managers is there a single fund manager that can manage all assets well for you take a look at the table on your screen it shows the rank of various fan managers in terms of their average five-year rolling returns sdfc stands at the top with all its scheme in the ranking one or two adya Bera LC and SBI each have two of their schemes ranking between one and three but what about the lags UTI has three of it scheme ranking either six or seven ad baa has two so in terms of average fiveyear rolling returns HDFC is the best pension fund manager while UTI is the worst and with this we have come to the end of this video if you found this video useful do share it with your friends and family I'll see you with a new video very soon till then take care mutual fund Investments are subject to Market risks read all scheme related documents carefully

Channel: ET Money

Views: 127,530

Keywords: National Pension System, NPS, investment option for retirement, investment for retirement, retirement planning, NPS assets, NPS AUM, NPS investments, pension fund managers, NPS fund managers, HDFC Pension Management, Aditya Birla Sun Life Pension Management, Aditya Birla Sun Life Pension, HDFC Pension, rolling return, rolling return analysis, state government nps, Corporate sector NPS, Axis Pension Fund Management, SBI Pension Fund, NPS returns

Id: 70FhmCwXG1k

Length: 10min 49sec (649 seconds)

Published: Wed Nov 08 2023