Data Insight: Relationship Between Net Asset Value (NAV) and Assets Under Management (AUM) of Pension Funds in India
Research Questions:
- Is There any Relationship Between Net Asset Value (NAV) and 5 Year Fund Returns of Funds from Different Fund Houses in NPS (National Pension System)? (Refer: Figure-1)
- Is There any Relationship Between Net Asset Value (NAV) and Assets Under Management (AUM) of Funds from Different Fund Houses in NPS (National Pension System)? (Refer: Figure-1)
Problem Description & Approach:
Usually as an Investor in Mutual Funds or Pension Funds, We get a Doubt, that is, if NAV is Higher, It may not Experience Higher Growth in Long Term because of Investor Sentiment. Also we get a Doubt that if NAV is Less, it results into Higher Growth rates annually in long term. These are the typical investor beliefs (from a common man side). Then, I thought let me try from data point of view. What the real data says. And then Took the Data of Pension Funds (both Public and Private fund) in NPS scheme. Then found out is there any Relationship Between NAV and 5 Year Returns of the Fund; and Is There any Relationship between NAV and AUM (Assets Under Management) using the Data Table in Figure-1. Another Investor belief is if NAV is higher, that results into Higher AUM in that Fund over a period of time. Is this Correct?
To answer and Above Doubts, Applied Correlation, Regression and Chi-Square Test Over the Data Table in Figure-1.
Figure-1: Net Asset Value and Assets Under Management of Different Pension Funds in India
(NPS Scheme-Equity Plans)
(Source: “NPS Scorecard”, The Economic Times, September 08, 2025)
Data Analysis:
Table-1: Correlation Matrix: NAV, 5 Year Returns of Pension Funds (Equity Focused) and AUM
| NAV | 5Y Return % | AUM | |
| NAV | 1 | ||
| 5Y Return % | 0.006499 | 1 | |
| AUM | 0.353222 | -0.17801 | 1 |
Table-2: Regression Matrix: NAV and 5 Year Fund Returns
| SUMMARY OUTPUT | ||||||||
| Regression Statistics | ||||||||
| Multiple R | 0.006499 | |||||||
| R Square | 4.22E-05 | |||||||
| Adjusted R Square | -0.12495 | |||||||
| Standard Error | 1.902654 | |||||||
| Observations | 10 | |||||||
| ANOVA | ||||||||
| df | SS | MS | F | Significance F | ||||
| Regression | 1 | 0.001223 | 0.001223 | 0.000338 | 0.985783 | |||
| Residual | 8 | 28.96074 | 3.620092 | |||||
| Total | 9 | 28.96196 | ||||||
| Coefficients | Standard Error | t Stat | P-value | Lower 95% | Upper 95% | Lower 95.0% | Upper 95.0% | |
| Intercept | 19.40089 | 1.296603 | 14.96286 | 3.93E-07 | 16.41091 | 22.39086 | 16.41091 | 22.39086 |
| NAV | 0.000482 | 0.026244 | 0.018384 | 0.985783 | -0.06004 | 0.061002 | -0.06004 | 0.061002 |
Table-3: Regression Matrix: NPV and AUM
| SUMMARY OUTPUT | ||||||||
| Regression Statistics | ||||||||
| Multiple R | 0.353222 | |||||||
| R Square | 0.124766 | |||||||
| Adjusted R Square | 0.015361 | |||||||
| Standard Error | 18395.15 | |||||||
| Observations | 10 | |||||||
| ANOVA | ||||||||
| df | SS | MS | F | Significance F | ||||
| Regression | 1 | 3.86E+08 | 3.86E+08 | 1.14041 | 0.316728 | |||
| Residual | 8 | 2.71E+09 | 3.38E+08 | |||||
| Total | 9 | 3.09E+09 | ||||||
| Coefficients | Standard Error | t Stat | P-value | Lower 95% | Upper 95% | Lower 95.0% | Upper 95.0% | |
| Intercept | 1250.744 | 12535.76 | 0.099774 | 0.922979 | -27656.8 | 30158.26 | -27656.8 | 30158.26 |
| NAV | 270.9614 | 253.733 | 1.0679 | 0.316728 | -314.148 | 856.0709 | -314.148 | 856.0709 |
Research Findings:
- Correlation Coefficient of (0.006499) indicates that There is almost no Relationship between NPV and 5 Year Return of Funds or very little positive relation.
- Correlation Coefficient of (0.353222) indicates that There is Minimal Relationship between NPV and AUM of Funds. That means, up to some extent AUM can grow based on NPV (that is, unit price).
- In both Regression Tables p-value >0.05 indicates that there is no Effect of NPV on 5 Year Returns of Pension Funds and There is no Effect of NPV on AUM
- Chi-Square Test of NAV and 5 Years Returns of Funds gave ZERO. It indicates that There is no Association between NPV and 5 Year Returns of Fund.
- Similarly, Chi-Square Test Value for NPV and AUM is 7.3506E-117, indicating there is almost (nil or) very little association between NPV and AUM of the Fund. However, Null Hypothesis is rejected here.
- In Summary, When we are investing in Mutual Funds or Pension Funds, We need not Worry much about NPV. NPV is not an Indicator or Either Growth or Decrement.
- Irrespective of NPV of fund, One can Invest. This is because Fund’s Returns or AUM of Fund won’t Depend much on the Net Present Value of Each Unit of Fund.
- That means, Common Man Doubts/beliefs or Investor Sentiments related to NPV value and its role in Fund Growth or Assets Under Management (size of the fund) is not real.
- One does not have to Worry much about NPV while investing. Fund Growth and AUM size depends on Other Factors Such as Global Market Movements, GDP growth rate, Sensex Growth Rate, Investments, Government Spending and Monetary Policy. NPV has average correlation to AUM (Correlation coefficient: 0.35) in the considered pension funds-equity plans.
- NPV helps in building assets (AUM); but not that much. (this is because both Correlation and Chi-square are indicating weaker positive relationship between NPV and AUM).
- In Summary, NPV is slightly Related to the Fund Size; but NPV is not Related to Fund Returns.
- One more thing is, there is no relationship between AUM and 5 Year Returns of the Fund (Correlation Coefficient came negative: -0.17801)
- That means, Irrespective of Fund Size, the Growth rate of the Fund can Vary annually. It does not matter for growth rate of fund, whether it is a small fund or large fund in size. In Summary, Fund returns are Independent of Fund Size in general.
- Usually, in real life, we will have different dilemma, doubts, questions; only data can answer those doubts.
Hope this is Interesting.
Thank You,
Dr.Goparaju Purna Sudhakar
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References:
* “NPS Score Card”, The Economic Times, September 08, 2025