Thursday, December 1, 2022
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HDFC Pension Fund Scheme E


We evaluate the efficiency consistency of HDFC Pension Fund Scheme E – NPS TIER I measured in opposition to Nifty 50 TRI and UTI Nifty 50 TRI. The scheme was launched in Aug 2013 and at present has an AUM of little over Rs. 15 thousand crores- the very best AUM within the E phase for non-govt. subscribers.

In a earlier article, we listed the funding coverage of NPS fairness schemes, which behave like actively managed giant and mid cap funds: Is the NPS Fairness Scheme an index fund?

Subsequently it’s proper to find out how usually these funds outperform their benchmarks (BSE 100 or BSE 200). The Nifty 50 is an equal accessible benchmark. We first reviewed the efficiency of SBI Pension Fund Scheme E – NPS TIER I.

Disclaimer: Fund efficiency experiences current return and danger evaluation of a fund with consultant benchmarks and never funding suggestions. It should be expressly understood that the information beneath replicate solely previous efficiency and is on no account a sign of future efficiency.

We will use the Rolling return outperformance consistency to gauge efficiency. The fund returns are in contrast with class benchmark returns over each potential 1Y,2Y,3Y,4Y, and 5Y interval. Larger the outperformance consistency, the higher. Suppose 876 fund returns had been in contrast with 876 benchmark returns, and the fund has overwhelmed the benchmark 675 instances. The consistency rating can be 675/876 ~ 77%. All information are as of twenty ninth August 2022.

HDFC Pension Fund Scheme E – NPS TIER I vs Nifty 50 TRI & UTI Nifty 50 TRI

One yr

Metric UTI Nifty 50 Nifty 50 TRI
No of rolling return entries Index (1 Yr) 1960 1960
No of rolling return entries Fund (1 yr) 1960 1960
No of instances fund outperformed the index (1 yr) 1198 1081
rolling return outperformance Consistency Rating (1 yr) 61% 55%

Two years

Metric UTI Nifty 50 Nifty 50 TRI
No of rolling return entries Index (2 Years) 1719 1719
No of rolling return entries Fund (2 years) 1719 1719
No of instances fund outperformed the index (2 years) 1118 962
rolling return outperformance Consistency Rating (2 years) 65% 56%

Three years

Metric UTI Nifty 50 Nifty 50 TRI
No of rolling return entries Index (3 Years) 1476 1476
No of rolling return entries Fund (3 years) 1476 1476
No of instances fund outperformed index (3 years) 956 713
rolling return outperformance Consistency Rating (3 years) 65% 48%

4 years

Metric UTI Nifty 50 Nifty 50 TRI
No of rolling return entries Index (4 Years) 1236 1236
No of rolling return entries Fund (4 years) 1236 1236
No of instances fund outperformed the index (4 years) 762 513
rolling return outperformance Consistency Rating (4 years) 62% 42%

5 years

Metric UTI Nifty 50 Nifty 50 TRI
No of rolling return entries Index (5 Years) 995 995
No of rolling return entries Fund (5 years) 995 995
No of instances fund outperformed the index (5 years) 759 482
rolling return outperformance Consistency Rating (5 years) 76% 48%

Sadly, that could be a poor efficiency vs Nifty 50 for a non-index that desires to “maximise returns”. Given the constraints of the NPS, we should recognize that that is nearly pretty much as good because it will get for NPS schemes!

The HDFC T1 E fund has achieved higher than the SBI T1 E fund versus UTI Nifty 50 (see hyperlink above). That, after all, doesn’t make a pension fund with obligatory lock-in and annuity restrictions a greater purchase than UTI Nifty 50 Index fund!

We advocate avoiding fairness (scheme E) in your NPS portfolio! Until your employer contributes to the NPS  and you’ve got a everlasting job, it makes little sense to put money into the NPS. See: Steer clear of Company NPS if You Want to Retire ASAP!

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