The pension fund regulator has put restrictions on the amount of money an asset manager can invest in equity mutual funds, taking cognizance of the fact that some of them had invested huge sums of money in these investment vehicles.
The Pension Fund Regulatory and Development Authority (PFRDA), in a 20 August circular, has capped investment in equity mutual funds at 5% of the total corpus. The rule will also apply to fresh investments. After permitting active management of the equity portfolio in 2015, the regulator also allowed pension fund managers to invest through mutual funds to offer them flexibility.
