National Pension System (NPS) Investment Philosophy | HDFC Pension

Investment Philosophy for various Asset Classes

The investment philosophy of the Company is to meet a consistent long-term return objective while exposing the fund to the least possible risk, The overall investment strategy of the Company is focused on ensuring adequate returns on investments to subscribers consistent with protection, safety and liquidity of the funds alongside complying with the applicable investment guidelines as prescribed under Investment Management Agreement executed with the NPS Trust.

Investments in the Fixed Income instruments are made with the objective of optimising the returns by actively managing the risks associated with fixed income securities like Credit Risk, Interest Rate Risk & Liquidity Risk. Investments in Equity are made in the selected stocks from the pre-approved investment universe with the objective of achieving portfolio returns better than the returns generated by the benchmark index.

Brief details of Investment Philosophy in various Asset Classes are as under:

Asset Class Investment Philosophy
Equities (Asset Class E) The funds under Asset Class E are managed actively with the stock universe prescribed by PFRDA & Investment Committee. Our strategy is to construct a model portfolio from the approved universe of stocks with the objective of beating the returns generated by the benchmark index.
Corporate Bonds (Asset Class C) The funds under Asset Class C  are invested in corporate debentures of rated corporate instruments in corporate debentures are made in high quality long term debentures following internal due diligence and credit rating from independent credit rating agencies.
Government Securities (Asset Class G) The funds under Asset Class G are invested in State Government and Central Government per the scheme objective. The scheme is managed actively based on the view on interest rates in the market.
Alternative Investment Funds (Asset Class A) The funds under Asset Class A are invested in AT-1 bonds, Alternate Investment Funds (AIF), Real Estate Investment Trust (REITs), Mortgage Backed Securities (MBS), Infrastructure Investment Trusts (InvITs) as per the scheme objective and available liquidity and issuers.