NPS scheme: Why National Pension System does not invest in mid-cap and small-cap companies
LIC Pension, UTI Pension, and SBI Pension Management. According to Ashish Aggarwal, Director, Acube Ventures, NPS aims to maximize returns for investors while minimizing risks - a prudent strategy for such a large, nationwide pension system.
So NPS funds park assets mainly in large-cap equities from reputable, established companies along with sovereign and debt instruments. “Though small and mid-caps demonstrate exhilarating short-term spurts, they falter on governance and liquidity fronts.
Moreover, managing millions of subtle investments operationally would be an arduous exercise," said Ashish Aggarwal However, know that PFRDA regularly reviews policies ensuring ideal investor safety without compromising too heavily on upside potential. For those with higher risk appetites desiring small/mid-cap exposure, actively managed mutual funds may be more suitable, he further added.
With a focus on simplification, reducing compliance burdens, and enhancing disclosure standards, PFRDA has announced amendments to the NPS Trust and Pension Fund Regulations, According to PFRDA, the amendments to NPS Trust Regulations aim to streamline the process of appointing trustees, delineate their terms and meeting protocols, and designate the CEO. Similarly, adjustments to Pension Fund Regulations are intended to standardize governance practices under the Companies Act, 2013, and elevate disclosure standards for pension funds.
These revisions, which became effective earlier this month, are in alignment with the objectives outlined in the 2023-24 Union Budget, focusing on reducing compliance costs and fostering a conducive business environment. Disclaimer: The views and recommendations made above are those of individual analysts, and not of
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