Mistakes to avoid while choosing a fund manager: When selecting a fund manager, avoid the following mistakes: It is a low-cost investing strategy that is geared toward a comfortable retirement. NPS subscribers can invest in both equities and debt funds with a single transaction. When you retire, you receive a lump payment plus a monthly pension. However, it has been shown that subscribers make some typical mistakes while starting an NPS account, which have a negative impact on their monthly pensions and withdrawal amounts at retirement. To be successful in the NPS, subscribers must understand the value of being an active or automatic investor.

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They claimed that if an investor has opted to invest more than 50% of his or her portfolio in equity, he or she should select the active option and avoid several frequent blunders when selecting a fund manager.

NPS account: Active vs auto mode

Manikaran Singhal, Founder of goodmoneying.com, commented on the two options available to subscribers when registering an NPS account “At the time of opening an NPS account, a subscriber has the choice of choosing between active and auto mode of operation. It is recommended that the investor choose active mode instead of auto mode if he or she is an aggressive investor and has chosen an equity exposure of more than 50%. In order to open an NPS account, a subscriber is urged to take this initial step.”

How to choose fund manager during NPS account opening

The SEBI-registered tax and financial expert Jitendra Solanki told NPS account users to choose fund managers with care, “Choosing a fund manager is just as important as choosing active or auto mode. A fund manager with greater performance in equity funds is recommended for investors who have chosen increased equity exposure. To compensate for this risk, investors should choose a fund manager that has demonstrated superior success in managing debt funds.”

Evaluating fund manger of one’s NPS account

Solanki gave the following advice on analysing the performance of a fund manager: “The sharp ratio and rolling returns can be used to analyse the success of a fund management. In contrast, the rolling return will provide a clear picture of the fund manager’s performance at regular periods.”

If need, exercise option to choose fund manager

According to Manikaran Singhal of goodmoneying.com, NPS subscribers may make mistakes after being cautious when opening their NPS accounts. A fund manager can be changed once a year for both active and automatic NPS users, he said.

The following are five frequent mistakes that NPS members should avoid while subscribing to an NPS plan:

1] Choose active or auto mode on the basis of equity/debt exposure;

2] Choose equity/debt fund manager on the basis of equity/debt exposure;

3] Check ‘sharp ratio’ of the fund managed by the fund manager you are looking to choose;

4] Check about the ‘rolling return’ of the fund managed by the fund manager you are looking to select; and

5] Evaluate the performance of your selected fund manager and if not satisfied with the return it has given, change your fund manager as NPS subscribers are allowed to change its fund manager once in a year.

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