The best part about the NPS is that you are not stuck to one fund for life. Unlike a pension fund or a Ulip, investors in the NPS can choose from six pension fund managers. But you are allowed to switch managers just once in a year. You can also invest only through one.
Choosing pension fund managers
The best part about the NPS is that you are not stuck to one fund for life. Unlike a pension fund or a Ulip, investors in the NPS can choose from six pension fund managers and even shift from one to another if they are not happy with the performance or services of their pension fund. But you are allowed to switch managers just once in a year. Turn to Page 6 to know the annualized returns offered by the different funds of these pension fund managers. You can invest only through one pension fund manager. It is not possible to invest in the equity fund of one pension fund and the gilt fund of another pension fund.
Though all equity funds invest in the same basket of stocks and have the same charges, there is a difference in the returns of the various funds. This could be because of the prices at which these funds made their purchases on a particular day. On the other hand, there is a bigger difference in the returns from corporate bonds and gilts. Though the Pension Fund Regulatory and Development Authority keeps a close watch on the quality of bonds in the portfolios of NPS funds, some bonds have slipped below the minimum investment grade. In one case, some investments even turned into non-performing assets. However, mostly the investments are in good quality bonds and are reasonably safe bets
It is noteworthy that the G class gilt funds and C class corporate bond funds of the NPS managers were able to beat the corresponding mutual fund categories. This is because the expense ratio makes a big difference when the returns are low. The NPS has very low fund management charges, which helps the funds generate better returns than mutual funds. The difference in the performances of different pension fund managers is because of the duration calls taken by them. In recent months, gilt funds and income funds have outperformed because of the sharp fall in interest rates. This performance may not be repeated in the coming years.
1.ICICI Prudential Tax Plan
2.Reliance Tax Saver (ELSS) Fund
3.HDFC TaxSaver
4.DSP BlackRock Tax Saver Fund
5.Religare Tax Plan
6.Franklin India TaxShield
7.Canara Robeco Equity Tax Saver
8.IDFC Tax Advantage (ELSS) Fund
9.Axis Tax Saver Fund
10.BNP Paribas Long Term Equity Fund
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