NPS fund managers deliver double-digit returns on gilt schemes

The rally in government securities (g-secs) has helped many investment vehicles deliver solid returns over the past few years.

Not to be left behind the gilt funds of the national pension system (NPS), called scheme G, have managed to deliver double-digit returns consistently over the past five years.

In the last one year, the scheme G of NPS fund managers have managed 12.2-14.3 per cent returns, according to data from Value Research. Debt mutual funds as a category have managed 10.8-11.8 per cent. Thus, NPS gilt funds have scored over debt mutual funds. These returns are also equal to or higher than the benchmark CCIL ALL Sovereign Bond – TRI.

Even over a five-year timeframe, almost all NPS gilt funds have managed to deliver double-digit returns.

Source: Value Research

HDFC Pension fund has been the chart topper over the one-year period, delivering 14.3 per cent returns. Over the longer term horizon of five years, LIC Pension has come out on top with 11.1 per cent returns.

Except UTI Retirement, all other NPS fund managers have managed double-digit returns across one, three and five-year periods.

Government securities have delivered well for mutual funds and other investment avenues too.

Interest rates have been on a decline over the past year or so, with the RBI steadily reducing repo rates.

In the last 2-3 years, the yields on the benchmark 10-year g-secs have come down from 8.2 per cent to less than 6 per cent currently. Since yields and bond prices move in opposite directions, government securities have gained handsomely.

The NPS is a retirement investment vehicle that allows contributions till the age of 60 across equity, corporate bonds and gilts. At 60, you need to annuitize 40 per cent of the accumulated corpus so that you get a regular pension. Additional tax deductions of up to Rs 50,000 under section 80CCD are available for investors every year.