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Scheme E or equity scheme of NPS mainly invests in large cap stocks. Photo: iStock
Scheme E or equity scheme of NPS mainly invests in large cap stocks. Photo: iStock

Where does NPS invest your money: Top five stock holdings of pension funds

  • NPS Scheme E manages around 1,900 crore in its Tier 1 Account, as on September 23
  • Reliance Industries remains the top holding of all pension fund managers, shows the data available with the pension fund managers.

Equity Scheme, called as Scheme E of National Pension System (NPS) has disappointed its investors with paltry trailing returns in the last one-, three- and five-years. The returns were in line with the average performance of the benchmark large cap indices- Bse Sensex and Nifty50. The index is hovering almost at the similar levels as one year ago, after recovering through the great fall caused by the outbreak of coronavirus and lockdowns in thelast 7-8 months. The comparison has been done with the large cap indices as the top stocks held by the pension fund managers in Scheme E of NPS are all large caps.

Why do NPS does not invest in mid and small companies? Well, NPS does not aim to maximize the returns, but to look at stable growth for investors. Large cap stocks are the biggest companies which are comparatively safer than the smaller stocks.

Top equity holdings of NPS fund managers

NPS Scheme E manages around 1,900 crore in its Tier 1 Account, as on September 23. Reliance Industries remains the top holding, shows the data available with the pension fund managers.

HDFC Pension Fund, managing the maximum assets under Scheme E holds 1/3rd of its portfolio in the top five stocks. The fund manages assets worth 4,403 crore. Its top five holdings are - Reliance Industries, Infosys, ICICI Bank, Kotak Mahindra Bank, Tata Consultancy Services.

The second largest fund manager, SBI Pension Fund holds assets worth 3,855 crore in Scheme E. Its top five holdings include- Reliance Industries, HDFC Bank, Infosys Technologies, ICICI Bank, Kotak Bank. The fund holds 36% of its portfolio in the top five stocks.

ICICI Pension Fund manages 2,039 crore worth assets under the equity scheme of NPS. Its top five stock holdings are Reliance Industries, HDFC Bank, Infosys, HDFC, Tata Consultancy Services.

LIC Pension Fund with 1,009 crore AUM in Scheme E invests mainly in Reliance Industries, Infosys Technologies, HDFC Bank, Tata Consultancy Services (TCS), ICICI Bank.

Top five holdings in Scheme E of UTI Retirement Services include Reliance Industries, HDFC Bank, Infosys Technologies, ICICI Bank, Tata Consultancy Services (TCS).

Top five holdings in Scheme E of Kotak Pension Fund weighs 42% of the total portfolio.. The top five stocks held are HDFC Bank, ICICI Bank, Infosys Technologies, Reliance Industries, Tata Consultancy Services.

Birla Pension Fund holds RIL, HDFC Bank, Infosys, ICICI Bank, HUL as the top stocks.

Performance of Scheme E of NPS Tier 1 Account, returns over one year are annualised, data as on October 23, source: NPS Trust
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Performance of Scheme E of NPS Tier 1 Account, returns over one year are annualised, data as on October 23, source: NPS Trust

NPS allows maximum 75% in equities

NPS offers four investment options - equities, corporate debt, government bonds and alternate investment funds to an investor. An investor can opt for auto choice which follows a pre-defined investment allocation on the basis of the investor's age and risk profile. Or, an investor may go for auto choice if she wants a customised investment portfolio in NPS. Though, active choice also comes with some rules. In any case, NPS does not allow to invest over 75% in equities i.e., Scheme E. The allocation aims at cushioning the fall in one asset class

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