NPS corporate bond schemes of HDFC and SBI outperform mutual funds over five years

Birla Sunlife Pension Scheme has improved its performance and retained its position as the top performer over three years in the corporate debt funds category among National Pension System (NPS) funds. It has delivered 10.29 percent annually over three years, beating its benchmark – CCIL Bond Broad – in the process.

Other pension fund managers’ Schemes C (corporate debt) did well, too, posting returns between 8.52 percent and 9.93 percent during the period, data from Valueresearch shows. They trounced their corporate bond mutual fund counterparts, which recorded a category average of 7.61 percent, but could not beat the benchmark – CCIL Bond Broad TRI (10.16 percent).

Outperforming mutual funds

Birla Sunlife Pension Scheme was followed by HDFC Pension Fund (9.93 percent) and SBI Pension Fund (9.7 percent). Kotak Pension Fund was the least impressive scheme in this category, yielding 8.52 percent annually over three years. However, even this fund outperformed the corporate bond mutual fund category.

In the five-year return category, four pension funds out of six with a five-year track record outperformed the benchmark (9.84 percent). Moreover, all of them beat the corporate bond mutual funds category average (7.81 percent).

HDFC Pension Fund’s Scheme C delivered the highest return (10.04 percent) annually over five years. Next on the list were ICICI Prudential Pension Fund (9.88 percent), SBI Pension Fund (9.86 percent) and LIC Pension Fund (9.74 percent). Even Kotak Pension Fund, which was at the bottom of the list with 9.21 percent return, was within striking distance of the benchmark’s performance over these five years.

The five-year returns are more relevant in the context of NPS, as it is a retirement-oriented vehicle aimed at helping individuals create a substantial retirement corpus over the long-term. Through NPS, you can invest in a mix of equity, government securities and corporate bonds, with the maximum exposure to equity being capped at 75 percent. There are tax benefits too for your contributions.