Six months after the Employees? Provident Fund Organisation broke the State Bank of India (SBI) monopoly on its investment management by bringing in private sector fund managers, it emerges that the PSU bank is still delivering the best returns.
The corpus in EPFO?s schemes was split among four managers on September 17, 2008. By the end of February 2009, SBI delivered 9.1% returns, ICICI Prudential AMC returned 8.8%, while both HSBC AMC and Reliance Capital AMC yielded 8.7%.
However, Crisil, which monitors the performance of these fund managers on an ongoing basis ranked SBI fourth on its portfolio?s maturity profile and second on asset quality, as of December 31, 2008.
At the time, SBI had delivered 9.7% returns but most of its holdings would have matured in less than one year. The agency hasn?t yet analysed the performance for the months of January and February 2009.
By December 2008, Reliance AMC had yielded 9.1%, ICICI Pru AMC 9% and HSBC AMC 8.5%? in line with the EPF rate recently announced for 2008-09. .
In the maturity analysis by Crisil, ICICI Pru AMC ranked the highest as the maturity profile of its portfolio was more aligned to EPFO?s long-term time horizon, having the concentration in the 5-15 year bracket. Reliance AMC stood second, while HSBC AMC was third. EPFO doesn?t allow investment in equity shares.
In terms of asset quality, Crisil found HSBC AMC as the best fund manager. SBI, ICICI Pru AMC and Reliance AMC held second, third and fourth positions, respectively.
EPFO administers two other schemes apart from the EPF?the Employees? pension scheme of 1995 (EPS) and the Employees? deposit linked insurance scheme of 1971 (EDLI).
HSBC AMC manages the EPS and EDLI corpus. ICICI Prudential AMC manages a part of the EPF corpus and EPFO?s own staff PF and gratuity funds. Reliance Capital AMC and SBI manage the EPF monies.
Worryingly, Crisil claimed that there ?were still some data gaps? in the information it received for its analysis. To counter these gaps, the rating agency made some assumptions.
Crisil has considered investments in IIFCL as guaranteed by the central government, though not explicitly stated, based on past experience of borrowing by the infrastructure financing firm. Intriguingly, the agency stated that evaluation based on mark-to-market calculation has not been done for December ?on advice from EPFO and non-confirmation from all portfolio managers.?
?Some investments have been mentioned as ?STG? by portfolio managers, which have been considered as SDL for the purpose of the analysis after considering the yield on the securities,? the agency?s presentation to the Finance and Investment Committee noted.
In its meeting last month, FIC members asked EPFO why returns for the months of January and February had not been analysed yet and what steps were being taken to ensure that data gaps don?t persist, going forward.
Crisil?s month-wise analysis found that all the fund managers yielded maximum returns during September.
During the truncated month, return given by SBI was 10.5%, Reliance AMC 10.41%, ICICI Pru AMC 10.4% and HSBC AMC 10.9%.
In October, SBI yielded 10%, Reliance AMC 9.91%, ICICI Pru AMC 0% and HSBC AMC 9.3%. In November, the respective returns were 8.5%, 8.21%, 8.4% and 8.2%. In the following month, the four fund managers gave returns of 8.1%, 8.76%, 8.71% and 7.92% respectively.