PFRDA allows PFMs to invest directly in equities
The Pension Fund Regulatory and Development Authority (PFRDA) has allowed fund managers to invest directly in equities, much against the original mandate of investment only in equity index funds, an official told FE on Thursday.
However, the regulator does not have the equity exposure limit beyond 50%.
The move comes in the wake of higher charges of up to 1.5% for investing in an equity index fund of a mutual fund. Also, the small corpus of NPS made it non-viable for the fund managers to construct an index fund on their own, sources said.
Though the rules were changed in January, it had not been notified as yet. Fund managers contacted by FE confirmed the move but declined to pass on the notification copy.
At present, the NPS corpus is managed by PFMs promoted by LIC, UTI AMC, SBI, ICICI Bank, Kotak Mahindra and Reliance Capital.
Corpus of NPS, launched in 2004, is around R28,000 crore at end February 2013. The corpus has grown 77% year-on-year to R15,163 crore in 2011-12 and 83% in 2010-11. The NPS initially enrolled new central government employees and subsequently rolled out to employees in 24 states, PSUs, corporates and even the unorganised sector workers.
The NPS has been able to generate 14.52% return on the equity oriented E-scheme, 14.17% under the corporate bonds C-scheme and 10.82% for government debt heavy G-scheme in the last one year.
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