According to reports from Business Standard, choosing the right pension fund manager is crucial for maximizing long-term returns from National Pension System (NPS) investments. While past performance does not guarantee future returns, it provides an indication of how consistently a fund manager has performed across market cycles and asset classes. The analysis compares assets under management (AUM) and three-, five-, and 10-year returns of pension fund managers across equity, corporate bond and government securities schemes.
Starting in the second half of this year, the National Pension Service will conduct compliance checks on stewardship activities for the first time. As reported by The Economic Times, the National Pension Fund Management Committee approved this framework at their sixth meeting of the year, with the performance bonus payout rate for fund management headquarters executives and staff set at 78.6%. The committee will prepare reports on seven stewardship activities and 12 compliance check items by principle, to be disclosed after review by the stewardship subcommittee. This enhanced framework aims to ensure effectiveness by linking stewardship activity evaluation results when allocating additional delegated funds or retrieving them.
The cumulative five-year financial segment return (time-weighted return) of the National Pension Fund is 9.75%, which is 0.16 percentage points higher than the benchmark return of 9.59%. According to The Economic Times, the return by asset class performance shows 11.24% for domestic stocks, 17.82% for overseas stocks, 1.39% for domestic bonds, 6.24% for overseas bonds, and 12.75% for alternative investments. Minister Jung Eun-kyeong stated that the 2025 performance reflects the fund management headquarters' nimble response to changes in domestic and overseas financial markets, significantly delaying the depletion timeline of the National Pension and strengthening fiscal sustainability.
According to the report, the analysis focuses on three key performance metrics - three-year, five-year, and 10-year returns - across three major asset classes - equity, corporate bonds, and government securities. This structured approach helps investors understand how fund managers have performed across different market cycles and asset classes, providing a comprehensive view of their investment capabilities and risk management strategies. The enhanced stewardship framework introduces absolute performance assessment alongside the previous relative performance against benchmark returns, enhancing the fund's sustainability and long-term performance evaluation.
Recent data from The Economic Times shows DSP Pension Fund Managers Private Limited - Scheme C - TIER I with an NAV of ₹12.1443. The scheme, which was incepted on December 26, 2023, is classified in the first pentile based on returns, downside risk and consistency parameters. The fund's portfolio comprises 38 companies with highest exposure to SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA SR IX 7.39 BD 21MR30 FVRS1LAC, maintaining a primarily AAA rated portfolio structure. As per The Economic Times, this scheme is an NPS scheme that invests predominantly in Bonds and is meant for TIER I investors, with the fund lying in the first pentile based on parameters of Returns, Downside risk and Consistency.
