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All You Need To Know About NPS Corporate Bond Funds & Its 5 Year Returns
The National Pension System (NPS) allows eligible subscribers to select a Pension Fund Manager (PFM) and a scheme option when enrolling in the Central Record Keeping Agency (CRA) system. There are various PFMs available through NPS, two investing choices (Auto choice or Active choice), and four asset classes (equity, corporate debt, government bonds, and alternative investment funds). A subscriber initially needs to select the PFM first, and after that, the subscriber has the choice of selecting any of the investment alternatives. Over the previous year, NPS scheme C, or corporate debt funds, has regularly delivered massive returns and also have outperformed benchmark returns over the last 3 years. The returns of NPS Scheme C Tier-I and NPS Scheme C Tier-II will be discussed in this article.
NPS Scheme C Tier-1 Returns
According to the NPS Trust, HDFC Pension Fund delivered the highest result in this category under the NPS Scheme C Tier-1, with a 1-year return of 7.06 percent, a 3-year return of 11.53 percent, and a 5-year return of 8.78 percent as of October 15th, 2021.
| Pension Fund | AUM (Rs Cr) | Subscribers | NAV | Returns 1 Year | Returns 3 Years | Returns 5 Years |
|---|---|---|---|---|---|---|
| Aditya Birla Sun Life Pension Management Ltd. | 97.53 | 20,652 | 14.5692 | 6.38% | 10.88% | NA |
| HDFC Pension Management Co. Ltd. | 4332.13 | 8,78,001 | 22.3773 | 7.06% | 11.53% | 8.78% |
| ICICI Pru. Pension Fund Mgmt Co. Ltd. | 2005.52 | 3,86,362 | 34.0074 | 6.66% | 10.86% | 8.53% |
| Kotak Mahindra Pension Fund Ltd. | 364.68 | 53,989 | 32.7362 | 6.43% | 10.04% | 7.75% |
| LIC Pension Fund Ltd. | 1071.54 | 2,42,883 | 22.0923 | 6.37% | 11.31% | 8.42% |
| SBI Pension Funds Pvt. Ltd | 3946.61 | 8,94,263 | 34.1653 | 6.49% | 11.08% | 8.53% |
| UTI Retirement Solutions Ltd. | 540.24 | 94,785 | 30.3249 | 5.94% | 10.63% | 8.10% |
| Benchmark Return as on 15/10/2021 | 7.66% | 12.07% | 8.75% |
NPS Scheme C Tier-II Returns
LIC Pension Fund Ltd. has given the highest returns of 10.05 percent in the last year under the NPS Scheme C Tier-II, with a three-year return of 11.99 percent. The benchmark returns for the NPS Scheme C Tier-II have been 7.66 percent in the last year, 12.07 percent in the last three years, and 8.75 percent in the last five years.
| Pension Fund | AUM (Rs Cr) | Subscribers | NAV | Returns 1 Year | Returns 3 Years | Returns 5 Years |
|---|---|---|---|---|---|---|
| Aditya Birla Sun Life Pension Management Ltd. | 8.07 | 7,405 | 14.5692 | 6.38% | 10.88% | NA |
| HDFC Pension Management Co. Ltd. | 244.6 | 1,31,171 | 20.9809 | 6.53% | 11.21% | 8.69% |
| ICICI Pru. Pension Fund Mgmt Co. Ltd. | 119.83 | 57,470 | 31.5219 | 6.40% | 10.71% | 8.42% |
| Kotak Mahindra Pension Fund Ltd. | 26.74 | 16,057 | 28.6359 | 5.99% | 10.61% | 8.10% |
| LIC Pension Fund Ltd. | 52.04 | 42,326 | 21.0094 | 10.05% | 11.99% | 8.64% |
| SBI Pension Funds Pvt. Ltd | 171.33 | 1,33,016 | 30.8364 | 5.97% | 10.60% | 8.23% |
| UTI Retirement Solutions Ltd. | 27.88 | 18,786 | 29.0071 | 5.75% | 10.53% | 8.12% |
| Benchmark Return as on 15/10/2021 | 7.66% | 12.07% | 8.75% |
NPS Pension Fund Managers
The subscriber is required to select one of the available PFMs under NPS which are as follows:
1. Birla Sun Life Pension Management Limited
2. HDFC Pension Management Company Limited
3. ICICI Prudential Pension Funds Management Company Limited
4. Kotak Mahindra Pension Fund Limited
5. LIC Pension Fund Limited
6. Reliance Capital Pension Fund Limited
7. SBI Pension Funds Private Limited
8. UTI Retirement Solutions Limited
Investment options under NPS
NPS offers two types of investment options: Active Choice and Auto Choice. Under the Active Choice option, a subscriber has the option to effectively choose how his or her money is invested and the subscriber must specify the PFM, Asset Class, and percentage of allocation for each scheme of the PFM. The allocation to four asset classes (equity, corporate debt, government bonds, and alternative investment funds) should be defined under a single PFM by a subscriber. The four asset classes are as follows:
- Asset class E - Equity and related instruments
- Asset class C - Corporate debt and related instruments
- Asset class G - Government Bonds and related instruments
- Asset Class A - Alternative Investment Funds including instruments like CMBS, MBS, REITS, AIFs, Invlts, etc.
Under the auto-choice option, investments will be deposited in a life-cycle fund. A predefined strategy will decide the amount of money invested across three asset classes, which will fluctuate depending on the age of the subscriber. Auto Choice is the ultimate pick for a subscriber who wishes to automatically minimize risk to more risky investment alternatives as he or she matures. A subscriber's investment exposure to equity and corporate debt declines as they become older and there are three distinct options provided under the 'Auto Choice' option relying on the risk appetite of the Subscriber i.e. Aggressive, Moderate, and Conservative.
