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NPS Scheme C Tier-1 Returns

According to the NPS Trust, HDFC Pension Fund delivered the highest result in this category under the NPS Scheme C Tier-1, with a 1-year return of 7.06 percent, a 3-year return of 11.53 percent, and a 5-year return of 8.78 percent as of October 15th, 2021.

NPS Scheme C Tier-II Returns

LIC Pension Fund Ltd. has given the highest returns of 10.05 percent in the last year under the NPS Scheme C Tier-II, with a three-year return of 11.99 percent. The benchmark returns for the NPS Scheme C Tier-II have been 7.66 percent in the last year, 12.07 percent in the last three years, and 8.75 percent in the last five years.

NPS Pension Fund Managers

The subscriber is required to select one of the available PFMs under NPS which are as follows:

1. Birla Sun Life Pension Management Limited

2. HDFC Pension Management Company Limited

3. ICICI Prudential Pension Funds Management Company Limited

4. Kotak Mahindra Pension Fund Limited

5. LIC Pension Fund Limited

6. Reliance Capital Pension Fund Limited

7. SBI Pension Funds Private Limited

8. UTI Retirement Solutions Limited

Investment options under NPS

NPS offers two types of investment options: Active Choice and Auto Choice. Under the Active Choice option, a subscriber has the option to effectively choose how his or her money is invested and the subscriber must specify the PFM, Asset Class, and percentage of allocation for each scheme of the PFM. The allocation to four asset classes (equity, corporate debt, government bonds, and alternative investment funds) should be defined under a single PFM by a subscriber. The four asset classes are as follows:

• Asset class E – Equity and related instruments
• Asset class C – Corporate debt and related instruments
• Asset class G – Government Bonds and related instruments
• Asset Class A – Alternative Investment Funds including instruments like CMBS, MBS, REITS, AIFs, Invlts, etc.

Under the auto-choice option, investments will be deposited in a life-cycle fund. A predefined strategy will decide the amount of money invested across three asset classes, which will fluctuate depending on the age of the subscriber. Auto Choice is the ultimate pick for a subscriber who wishes to automatically minimize risk to more risky investment alternatives as he or she matures. A subscriber’s investment exposure to equity and corporate debt declines as they become older and there are three distinct options provided under the ‘Auto Choice’ option relying on the risk appetite of the Subscriber i.e. Aggressive, Moderate, and Conservative.

Interest rates lowered

Due to the pandemic, RBI, on behalf of the union government has lowered the interest rate in India, hence the banks are now obliged to offer low-interest rates on FDs. So, here is a list below that will compare the FD rates in the top banks, operating in India.

One must remember, to open an FD investment, one must open an account in a particular bank. Usually, people invest in FDs, when they have a lump sum. But investment below Rs. 2 crores is commonly chosen by Indian citizens, hence, the rates mentioned below are listed on investment less than Rs. 2 crores.

State Bank of India (SBI)

The State Bank of India (SBI) is the largest public sector bank in India, but it offers quite a low level of interest on FDs. The SBI offers 2.90% to 5.40% interest to the general public while offers 3.40% to 6.20% interest to senior citizens. For FD up to 1 year to less than 2 years, the bank’s interest rate for the public is 5.00%, while the rate for a senior citizen is 5.50%. For FD up to 2 years to less than 3 years, the bank’s interest rate for the public is 5.10%, while the rate for a senior citizen is 5.60%. For FD up to 3 years to less than 5 years, the bank’s interest rate for the public is 5.30%, while the rate for a senior citizen is 5.80%. For FD up to 5 years and up to 10 years, the bank’s interest rate for the public is 5.40%, while the rate for a senior citizen is 6.20%.

HDFC Bank

HDFC Bank is offering better interest rates on FDs than the SBI, in some cases. The bank provides interest rates from 2.50% to 5.50% interest to the general public and provides from 3.00% to 6.25% interest to senior citizens. For FD up to 1 year 1 day to 2 years, the bank’s interest rate for the public is 4.90%, while the rate for a senior citizen is 5.40%. For FD up to 2 years 1 day to 3 years, the bank’s interest rate for the public is 5.15%, while the rate for a senior citizen is 5.65%. For FD up to 3 years 1 day to 5 years, the bank’s interest rate for the public is 5.30%, while the rate for a senior citizen is 5.80%. For FD up to 5 years and up to 10 years, the bank’s interest rate for the public is 5.50%, while the rate for a senior citizen is 6.25%.

Axis Bank

Axis Bank’s FD on the other hand is sometimes better than both HDFC and SBI, in long term, and for senior citizens. The bank is offering 2.50% to 5.75% interest to general people while offering 2.50% to 6.50% interest to senior citizens. For FD up to 2 years to less than 30 months, the bank’s interest rate for the public is 5.40%, while the rate for a senior citizen is 6.05%. For FD up to 30 months to less than 3 years, the bank’s interest rate for the public is 5.40%, while the rate for a senior citizen is 6.05%. For FD up to 3 years to less than 5 years, the bank’s interest rate for the public is 5.40%, while the rate for a senior citizen is 6.05%. For FD up to 5 years to 10 years, the bank’s interest rate for the public is 5.75%, while the rate for a senior citizen is 6.50%.

Punjab National Bank FD

Punjab National Bank is another top bank in India that is offering moderate interest rates on FDs. The banks offer 2.90% to 5.25% interest to the public and 3.50% to 5.75% interest to the senior citizens. For FD above 1 year and up to 2 years, the bank’s interest rate for the public is 5.00%, while the rate for a senior citizen is 5.50%. For FD above 2 years and up to 3 years, the bank’s interest rate for the public is 5.10%, while the rate for a senior citizen is 5.60%. For FD above 3 years and up to 5 years, the bank’s interest rate for the public is 5.25%, while the rate for a senior citizen is 5.75%. For FD above 5 years and up to 10 years, the bank’s interest rate for the public is 5.25%, while the rate for a senior citizen is 5.75%.

Comparison and best option

Hence, if you are going to invest in a 5 years’ FD scheme with an interest for the general public (you are not a senior citizen), then Axis Bank can be your choice because they are offering a 5.75% interest rate. Other top banks are offering less than that. On the other hand, for 5 years or more FD for the senior citizens, Axis Bank is offering a lucrative interest rate at 6.50%, which is better than other banks. At a time when interest rates on FDs are low, one should always compare the rates offered by other banks. Additionally, Post Office offers a better interest rate on FD than other banks. So, one can follow post office FD rates too.

Small cap funds much like small cap stocks have been in favour and despite the run up there is seen more upside in them. Though in a yearly or year to date basis, the index -small cap index has outperformed, there are seen significant drawdowns and hence one should go for a long term probably at least of 3 to 5 years.

So, here we put forth the various aspects of small cap funds:

Pointers to note when investing in small cap funds

Remember the volatility should not be confused with risk, in the long term small cap funds can reap good returns.

As India growth story looks promising, in the current positive domestic economic cycle, the scenario and prospects for small and mid caps looks good.

Nonetheless, those looking to invest in small caps should be discounting the fact that after a significant run up in the last 1-year one should lower down or moderate their expectations on return from the asset class category.

Who should invest in small cap funds?

Those investors who are able to understand market dynamics and economic cycle and have a longer term horizon can consider investment into small cap funds.

Also, one should be willing to take on the risk as well as likely volatility in these counters in which these funds are invested into. Note as per the SEBI’s mandate, small cap funds are required to invest 65 percent of the corpus into small cap stocks.

Top performing Small cap funds based on 3-year performance

Should you be investing in small cap funds in the given scenario?

The India growth story looks promising and given the momentum that it is extending small cap funds can be lapped up for good enough returns over a period of time. Though return expectations should be narrowed down. Also, monetary policy reversal by global banks can be another risk which is down to come in some time.