Source: BS
Context:
The Pension Fund Regulatory and Development Authority (PFRDA) has revised investment norms for private pension funds, allowing broader diversification to optimize returns. The changes came into effect immediately with the circular issued on December 10, 2025.
Previous Norms
- Private pension funds were allowed to invest in only 200 approved stocks under the National Pension System (NPS).
- Investments in commodities or ETFs were restricted.
- Limited flexibility in portfolio diversification, which could constrain returns.
Key Changes
- Equity Investments:
- Private pension funds can now invest in the top 250 stocks by market capitalization listed on Indian exchanges, up from the previous 200-stock limit.
- Commodity Exposure:
- Investments in gold and silver ETFs are now permitted, enabling funds to diversify beyond equities.
- Objective:
- Enhance portfolio diversification, manage risk, and improve long-term returns for subscribers.
Implications
- For Pension Funds:
- Broader equity universe and commodity exposure reduce concentration risk and improve portfolio flexibility.
- For Subscribers:
- Access to diversified investment options, including top-performing equities and commodity ETFs.
- For Markets:
- Likely increased demand for top 250 stocks and gold/silver ETFs, supporting market depth.
