NPS equity funds have consistently beaten large-cap mutual fund in last 10 years: A look at how NPS funds have performed

Equity funds
NPS equity funds are large-cap oriented, though some also hold stocks that are not in the Nifty. The long-term returns are fairly decent and comparable with the returns of large-cap and flexi-cap diversified equity funds.

Gilt funds
NPS gilt funds tend to have a long-duration orientation, so they will be very sensitive to interest rate movements. Their long-term returns are higher than what long-term bond funds have earned during the same period.

Corporate bond funds
Corporate bond funds have a shorter maturity profile than gilt funds, but are also sensitive to interest rate movements. The short- and long-term returns are slightly lower that what NPS gilt funds have earned.

Alternative investment funds
There is a very high degree of variation in the returns of NPS alternative investment funds. Going by the overall average returns generated by the category, the risk of investing in these funds does not seem worthwhile.

Note:Data.as on 22 Apr 2024; returns of over one year are annualised;
DSP Pension Fund not included because it started operations five months ago
Source: Value Research