By: Parag Kamthan, Editor.
Its a misfortune that just like mutual fund investors, the negative returns from equity over the last one year have made National Pension System Or NPS investors jittery too. All NPS tier-1 equity fund managers have under performed the benchmark index. but there is NO reason to panic as this is currently because of the stock market’s large -cap funds bias attitude.
The debt segment of the NPS normally compensates for all the volatilities in equities going on at present. As short term volatility won’t pull down long returns,therefore, investors should maintain their faith in NPS and continue their investment in it.
According to a strategic study conducted, NPS should be treated as a systematic investment plan or SIP running continuously for at least 20 years or so. Since it’s expense ratio is quite low, it will help boost long term performance. NPS investors can also look at increasing their allocation to equity.
One thing we should know and follow, investors have the option of of changing their asset allocations twice a year especially young ones, they can invest up to 75 % in equity if they wish to.
USP : NPS is a long-term product and investors should use short-term market volatility to raise their allocation in it.