Top NPS Mutual Fund vs Top Nifty 50 Index Fund: Which fund has given better returns in 3 years; know what Rs 10,000 monthly SIP has grown to

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National Pension System (NPS) is a retirement scheme, where the investor can select the fund manager (fund scheme) as per their choice. Once a year, they get a chance to change the scheme if it is not performing up to their expectations. What makes NPS different from fixed return retirement schemes such as Employees’ Provident Fund (EPF) is that NPS is a market-linked programme. NPS returns depend on equity exposure, which can be up to a maximum of 75 per cent, and the performance of the mutual fund the investor is contributing to.

Here’s a catch, even though NPS funds invest in equity, they can’t take much risk with NPS account holders’ money since it is meant for their retirement.

So, fund managers of almost all NPS funds follow the Nifty50 index.

It means they keep the same composition of stocks in the fund scheme’s portfolio as found in Nifty 50.

If a new company makes a cut for Nifty 50 and the old company drops from the Nifty 50 list, the fund manager also changes the stock combination of the fund according to that.

If we cast a glance at the three-year performance of Tier-I equity mutual funds, UTI Retirement Solutions Pension Fund Scheme – Tier-I has given the best returns at a CAGR of 20.70 per cent.  

On the other hand, there are many mutual fund schemes that track Nifty 50 index. Among the top Nifty 50 index mutual funds. In this write-up, know about the two funds in detail and which of the two funds has given more returns on a monthly SIP of Rs 25,000 in the three-year period. 

UTI Retirement Solutions Pension Fund Scheme – Tier-I 

The fund has given annualised returns (CAGR) of 20.66 per cent in the three-year period.

The fund’s annualised SIP returns (XIRR), meanwhile, in the same period are 27.71 per cent.

The net asset value (NAV) rate for the Category- E Tier-I account is Rs 71.7090 as of July 8, 2024.

The 52-week high NAV rate is Rs 66.436, while the 52-week low is Rs 48.7175.

Some of the top sectors in which it has invested its money are financial, energy and utilities, technology and consumer discretionary, and industrials.

The fund has 98.67 per cent of its investment in equity with ICICI Bank, Reliance Industries, HDFC Bank, SBI, and Infosys as its main stocks.

The value of Rs 10,000 SIP made three years ago has become Rs 52,822 in today’s date.

Kotak Nifty 50 Index Fund – Direct Plan – Growth

The fund has given an 18.91 per cent annualised return in the three-year period.

Its XIRR in the same period was 19.83 per cent.

The fund has assets under management of Rs 663.74 crore, while its NAV is worth Rs 15.838.

Launched in June 2021, the fund has an expense ratio of 0.15 per cent compared to the category average of 0.25 per cent.

The fund has 100 per cent of its investment in domestic equities of which 81.42 per cent is in large-cap stocks.

The fund has a portfolio of 50 stocks, against the category average of 43.66.

The main stocks in its portfolio are HDFC Bank, RIL, ICICI Bank, Infosys, and Larsen & Toubro.

The one who started a Rs 10,000 monthly SIP in the fund three years ago has a total of Rs 4,81,562.10.