NPS corporate bond funds of HDFC and Aditya Birla Sun Life top the return charts
Corporate debt funds have delivered double-digit returns over the last one year
October 13, 2021 / 12:02 PM IST
The National Pension System (NPS) allows subscribers in the all-citizen model to choose between active and auto choices. In the case of the latter option, the asset allocation towards equity (scheme E), corporate debt (scheme C), government securities (scheme G) and alternative assets (scheme A) is pre-decided as per the subscriber’s age. Within auto choice the subscriber has to choose between aggressive, moderate and conservative lifecycle funds.
As an investor grows older, her allocation towards equities and corporate debt will shrink, with a greater portion being directed towards government securities. The cap on corporate debt allocation under the conservative lifecycle fund is 45 percent. Under the active choice, where investments are made as per the subscriber’s directives, you can invest up to 100 percent in corporate debt funds.
NPS’ scheme C, or corporate debt funds, have been consistently delivering double-digit returns over the last one year. The corporate bond fund option is aimed at subscribers who are looking for stable returns, yet are willing to take some risks to earn higher-than-gsec returns. HDFC Pension fund delivered the best performance in this category, clocking an annualised return of 11.67 percent over the three-year horizon. Close on its heels was Birla Sun Life Pension Scheme with 11.43 percent returns. LIC Housing Finance finished third with 11.41 percent. Over the five-year-return period, too, HDFC Pension Fund occupied the top spot with a return of 8.72 percent.
All NPS funds beat their mutual fund peers, but only three – HDFC Pension Fund, Birla Sun Life Pension Scheme and LIC Pension Fund – outperformed the benchmark over the three-year horizon. Four out of six schemes C funds outscored the benchmark over five years, though all funds sprinted ahead of the benchmark CCIL – Bond Broad TRI.