Investors should not allow recent returns to influence asset allocation

Reducing exposure to equities and raising it to debt within NPS could prove disastrous in the long run

Equity funds belonging to the National Pension System (NPS) have been able to barely eke out single-digit returns over the past year. Debt funds, on the other hand, have been the star performers, with many giving returns in the high teens.

Returns of tier-1 equity funds range between 2.27 per cent and 7.14 per cent over the past year. Returns of corporate bond funds have been higher at 13.23-15.44 per cent. Government bond funds have fared even better, with returns ranging between 19.43 per cent and 22.66 per cent.

The reason? Equity markets have been weak for some time. While