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Investing in NPS has become easy but it is not easy to track its performance. Before you invest, find out which pension fund has given the best returns. Does it make sense for investors to shift from EPF to NPS? Yes No Can't say Vote. When Avinash Chandnani invested in the National Pension System NPS last year, he had planned to put money in five different pension funds. But when he was putting the second tranche of Rs 10, in another fund, Chandnani realised that NPS investors can't opt for two pension fund managers.

This week's cover story is aimed at investors like Chandnani and others who plan to invest in the NPS. It examines the performance of Tier I funds of the NPS and identifies the best pension funds.

It is not enough to go by the performance of individual schemes because an investor puts money in a combination of funds. We have, therefore, looked at blended returns of four different combinations of the equity, corporate debt and gilt funds. A balanced allocation would put The past months have not been very kind to aggressive investors.

The average return in the past one year is 2. Playing safe has also helped NPS funds for government employees. They have given double-digit returns in the past five years, thanks mainly to the interest rate cuts that have enhanced the value of the long-term bonds in their portfolios.

Should you switch from EPF to NPS? The healthy returns from the NPS come at a time when the interest rate of the Employees' Provident Fund is being hotly debated and the interest rate for the Public Provident Fund has been pruned to 8. This raises an important question. Should you shift your retirement savings to the NPS?

The proposal to switch from EPF to NPS was announced in last year's Budget and this year's Budget extended a one-time tax exemption to such a shift. The amendment allows EPF subscribers to make a one-time switch to the NPS. Once he shifts to NPS, iq option binary option broker review employee will have a one-time chance to return to the EPF fold.

The amendment also seeks to ensure that employers don't force a particular scheme down the throats of employees. However, the tax treatment of the NPS may prove a hurdle. Arbitrage binary option forum strategy the how do i start learn about stock market basics to be successful, there should be parity in the tax treatment," says Pension Fund Regulatory and Development Authority PFRDA Chairman Hemant Contractor read the interview here.

Financial advisers see another problem in the NPS.

Annuity rates in India are very low compared to what other options can offer. The Senior Citizens' Saving Scheme, for instance, gives 8. The PFRDA wants that the investor should be allowed to look beyond annuities. Investors will face that issue much later. Right now, they want to know the best NPS funds to invest in. In the following pages, we identify the best performing funds for various types of investors.

ULTRA SAFE INVESTORS Whether they invested through SIPs or put in a lump sum amount, risk-averse individuals have earned the highest returns. These are investors who stayed away from stocks and divided their NPS corpus between G class gilt funds and C class corporate debt funds. On average, gilt funds have given 9. As stock market fantasy trader result, the average return for ultra-safe investors in the past five years is in double digits.

Even in the short term, ultrasafe investors have been the biggest gainers among NPS investors. Will the good times continue? The gilt funds of NPS are holding long-term bonds with an average maturity of over 19 years and a modified duration of about 9 years. These funds have done well because interest rate cuts have pushed down bond yields.

But experts say this trend will not stay forever. Over a longer period, the portfolios will deliver returns similar to the yield-to-maturity of the bonds in the portfolios," says Nagpal of Outlook Asia Capital. Returns as on 25 April T hese are blended returns of the three classes of NPS funds as per the allocation of the investor 6-month and 1-year returns are absolute; 3-year and 5-year returns are compounded annual returns.

SIP returns are also blended returns of three types of funds. Value Research The average yield-to-maturity of corporate debt funds is higher at 8. Ultra-safe investors should consider a higher allocation to these funds. Admittedly, the short-term picture is not very attractive, with insipid returns in the past months. But the medium- and longterm returns are fairly attractive. The best performing fund ICICI Prudential Pension Fund has given double-digit returns.

It is interesting to note that the 3-year and 5-year SIP returns of all the pension funds are in double digits as well. But this is largely due to the rally in bond prices in the past one year. Debt-oriented hybrid mutual funds, also known as monthly income plans or MIPs, have given similar returns during this period.

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However, younger investors below 35 will be making a mistake if they play too safe. They can afford to have a larger portion of their NPS corpus in equity funds.

Also, it is not correct to assume that bond funds won't lose money. If interest rates go up, the Best penny stocks to invest in 2016 in india of gilt funds holding long term bonds will slip.

This will matter when an investor wants to exit," says Nagpal.

BALANCED INVESTORS Investors who spread their money across all three types of funds have not done too badly either. Here again, the short-term picture is rather bleak due to the poor returns by the equity funds.

The best performer in the past one year, Kotak Pension Fund, has given only 5. But the medium- and long-term returns are reasonably attractive. ICICI Prudential Pension Fund is again the best performing fund for this allocation, with returns of 9.

The balanced approach, which puts It has the potential to give reasonably good returns in the long term without taking too much risk.

Here are the best NPS funds to invest in

The 3-year SIP returns are also close to double digits. The investor will need to change his allocation as retirement nears. There are several theories about how much should be the allocation to equities at different ages. Some planners say that it should be minus your age. Besides, you might also have invested in other instruments for your retirement. Investors who can't take a decision should opt for the lifecycle fund of the NPS. It is also the default option for someone who has not indicated his desired allocation.

Under this option, the investor's age decides the equity exposure. The rebalancing happens every year on the investor's birthday. This is in keeping with the strategy to opt for a higher-riskhigher-return portfolio mix earlier in life. As the investor approaches retirement, he shifts to a more stable, low-risk portfolio. They have lost money in the past one year and delivered lower returns than corporate debt and gilt funds in the past five years.

But this should not make investors, especially younger people, ban this critical asset class from their portfolios. Till last year, equity funds were mirroring the returns of the index because pension funds were supposed to invest in index stocks in the same proportion as their weight in the index. But from Septemberfund managers have been allowed to invest in a larger universe of stocks and follow an active investment strategy that does not mirror the index. They still have to follow broad guidelines set by the PFRDA but can drop index stocks that are underperformers or pick up non-index scrips that have potential.

These include quality mid-cap stocks such as Shriram Transport Finance, LIC Housing Finance, Oracle and Rural Electrification Corporation. Experts see this as a positive development because a predominantly large-cap orientation would have prevented the NPS equity funds from beating the market.

More importantly, poor quality index stocks can now be dropped. Now that fund managers can invest actively, some funds will break out of the clutter," says a senior fund official. Living and entertainment Timescity iDiva Zoom Luxpresso Gaana Happytrips Cricbuzz Get Smartapp Networking itimes MensXP.

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