Lagging The Benchmark
It is always disheartening to see your investment underperform, be it stocks, mutual funds, or pension funds. It is okay if your fund’s underperformance is an aberration, but when it becomes regular, it’s time to take action. According to data released by NPS Trust on its portal, most equity schemes in Tier-I (Scheme-E Tier-I) have underperformed their benchmark on a 10-year basis. Of the four schemes that have completed 10 years, only one has outperformed the benchmark and that too with a very narrow margin. Fund managed by retirement solution has delivered 13.01 per cent return while the benchmark returns stand at 12.99 per cent. The other three funds, managed by ICICI Prudential Pension Fund, Kotak Mahindra Pension Fund, and SBI Pension Fund, have delivered 12.77, 12.89, and 12.64 per cent, respectively, as on December 30, 2022.
When we dug deeper into the numbers, the result was not very different. On a seven-year basis, of the six schemes, only one has outperformed the benchmark. The scheme managed by HDFC Pension Fund Management delivered 13.91 per cent against the benchmark return of 13.77 per cent.
The situation of underperformance is even worse on a three-year and five-year basis. All the schemes have underperformed the benchmark. On three years basis, the benchmark has delivered 12.36 per cent, while the average return from all the schemes stands at 11.15 per cent. On three years basis, the average return stands at 14.84 per cent, while the benchmark return is 15.95 per cent.