NPS funds hold long-dated bonds, which gain heavily when interest rates fall. This has helped returns in a big way in the past year. But it can also reverse sharply if interest rates rise
National Pension System (NPS) funds have been largely unaffected by the credit risk due to the Pension Fund Regulatory and Development Authority’s (PFRDA) cautious approach. NPS funds hold long-dated bonds, which gain heavily when interest rates fall. This has helped returns in a big way in the past year. But it can also reverse sharply if interest rates rise.
There are very few retirement products that help you accumulate a retirement nest egg and one such product is the NPS. It is a market-linked, defined-contribution product that needs you to invest regularly in the funds of your choice. Being a market-linked product, returns are based on the performance of the fund that you choose.
There are eight pension fund managers to choose from and one of the ways to choose your fund manager is by tracking the returns. Here is a breakdown of the performance of different funds of the private sector NPS.
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