How India’s youngest pension fund gamed a falling market to outdo its older rivals

Subscribe to enjoy similar stories. The annual report card for equity pension fund managers is out, and DSP's NPS Equity Fund has delivered a staggering 11.68% return in the last one year—five times higher than the second-best performer, which posted a modest 2.3%. To match the score of DSP's fund, the new kid on the block, the sum of the funds that gave positive returns would need to be more than doubled.

Among the 11 funds in this category, six recorded negative returns in the last year, according to the pension fund regulator's NPS Trust website. A closer look at DSP’s fund reveals an interesting pattern. At the end of 2024, 8.75% of its portfolio was in cash compared to Kotak Mahindra Pension Fund's 3.86%, the fund with the second-highest cash allocation.

While the average tier-1 NPS equity fund held 70 stocks, this fund had 27 positions. In an interview with Mint, Ramneek Kundra, chief investment officer of DSP pension fund, said people should not come to his fund looking at the past performance as the 12-month timeframe is too short to judge any equity fund. “I wish I could talk about a longer track record, but this is all that I’ve got for now," said Kundra, who was earlier the fund manager of Taurus Tax Shield Fund.

He managed the ELSS fund from May 2022 to August 2023, according to Value Research. The fund was ranked 22 when he joined and was in the sixth spot when he left in August 2023. He started DSP’s NPS fund on 26 December 2023.

Here is an edited excerpt of the interview: Cash calls are not the main reason for the outperformance. In fact, it has dragged our returns. If you look at 2024 (January to December), the benchmark, BSE 200, rose 14.72%.