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Fancy investments

You will have the option to invest a component of your contribution in a slightly adventurous asset class
By Narayan Krishnamurthy, Preeti Kulkarni | December 07, 2016

If you have an NPS account and are not part of the government-run scheme under the NPS, you will have the option to invest a component of your contribution in a slightly adventurous asset class.

The PFRDA has created a separate asset class under which subscribers to the private sector NPS can invest up to 5 per cent in Alternative Investment Funds (AIF) and Real Estate Investment Trusts (REITs). This new asset class is in addition to the existing equity, corporate bond and government debt category.

Other than this new option, the PFRDA has also introduced two new Life Cycle Funds for private sector subscribers to provide a preprogrammed diversification of assets in various asset classes as per the age and risk profile of the subscriber.

These are Aggressive Life Cycle Fund (ALCF) and Conservative Life Cycle Fund (CLCF). In ALCF, the maximum investment in equity is restricted to 75 per cent whereas the same has been restricted to 25 per cent in case of the CLCF.

This is a welcome change compared to the existing 50 per cent restriction in the current life cycle fund, which will now be known as moderate life cycle fund (MLCF).

 

olmdesk@outlookindia.com

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