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The Government had issued the last revision in the pattern of investment to be followed by non-Government Provident Funds, Superannuation Funds and Gratuity Funds in March, 2003. In the interest of providing wider avenues for investment by these Funds, revision in the earlier pattern has been approved by the Government.
As per the revised pattern, funds would be permitted to invest in Term Deposit Receipts of the public sector banks up to three years as against the present limit of less than a year. Further, the said funds can invest in the bonds of the public financial institutions and public sector companies if these are rated as investment grade by two credit rating agencies. It has also been decided to allow investment in Collateral Borrowing and Lending Obligations (CBLO) issued by Clearing Corporation of India Limited and approved by the Reserve Bank of India. An amount up to 5% of the total portfolio has also been allowed to be invested in shares of companies that have an investment grade debt rating from two credit rating agencies and up to 10% in the debt instruments bearing investment grade rating and/or equity-linked scheme of mutual funds regulated by Securities and Exchange Board of India.
The maximum exposure of any fund to investment in any gilt fund has been restricted to 5% of its portfolio at any point of time. The trustees would be enabled to use at least 10% of the total portfolio of government securities for active management, subject to marking the portfolio on marked to market basis.
The above amendments will come into force from the 1st of April, 2005.
A comparative chart showing the earlier and revised pattern is attached.
Comparison of Investment Pattern dated 6th March 2003 and Investment Pattern as revised on 24.1.2005
Investment Pattern dated 6th March 2003
Investment Pattern as revised on 24.1.2005
Instrument
%
Instrument
%
(i)
Central Govt. securities and / or units of mutual funds set up as dedicated funds for investment in Government securities and approved by SEBI
25%
(i)
Central Government; and/or units of mutual funds set up as dedicated funds for investment in Government securities and regulated by SEBI;
25%
(ii)
(a) Government Securities created and issued by any State Government ; and / or units of mutual funds set up as dedicated funds for investment in Government securities and approved by SEBI; and / or
15%
(ii)
(a) Government securities created and issued by any State Government; and/or units of mutual funds set up as dedicated funds for investment in Government securities and regulated by SEBI;
15%
(b) Any other negotiable securities the principal whereof and interest whereon is fully and unconditionally guaranteed by the Central Government/ any State Government except those covered under (iii) (a) below
(b) Any other negotiable securities the principal whereof and interest whereon is fully and unconditionally guaranteed by the Central Government/ any State Government except those covered under (iii) (a) below
Provided that irrespective of the proportion of investments stated in (i) and (ii) above, exposure of a trust to any individual mutual fund which has been set up as a dedicated fund for investment in Government securities, should not be more than 5% of its total portfolio at any point of time.
(c ) The Trustees, subject to their assessment of the risk-return prospects, may, if they so decide, divide the total portfolio under categories (i) and (ii)(a) above into tradable and non-tradable categories. Upto 10% of the total portfolio at the end of the preceding financial year can be treated as tradable and may be used for active management:
Provided that the tradable portfolio of Government securities shall be marked to market and mutual funds, which have been set up as dedicated funds for investment in Government securities, shall be valued at Net Asset Value at the close of the financial year.
(iii)
(a) Bonds/Securities of ‘Public Financial Institutions’, public sector companies”, including public sector banks; and/or
30%
(iii)
(a) Bonds/Securities of ‘Public Financial Institutions’ , “public sector companies” public sector banks; and/or
25%
(b) Short Duration (less than a year) Term Deposit Receipts (TDR) issued by public sector banks
(b) Term Deposit Receipts upto three years issued by public sector banks.
Provided that the instruments covered under (iii) (a) above have an investment grade rating from at least two credit rating agencies.
(c) Collateral Borrowing and Lending Obligations (CBLO) issued by Clearing Corporation of India Limited and approved by RBI
(iv)
To be invested in any of the above three categories as decided by their Trustees.
30%
(iv)
To be invested in any of the above three categories as decided by their Trustees.
30%
(v)
Shares of companies that have an investment grade debt rating from at least two credit rating agencies.
5%
(v)
The Trusts, subject to their assessment of the risk-return prospects, may invest up to 1/3rd of (iv) above, in private sector bonds / securities, which have an investment grade rating from at least two credit rating agencies.
(vi)
The Trustees, subject to their assessment of the risk-return prospects, may invest upto 1/3rd of (iv) above, in private sector debt instruments which have an investment grade rating from at least two credit rating agencies and/or in equity-linked schemes of mutual funds regulated by SEBI
2.
Any moneys received on the maturity of earlier investments reduced by obligatory outgoing, shall be invested in accordance with this investment pattern.
2.
Any moneys received on the maturity of earlier investments reduced by obligatory outgoing, shall be invested in accordance with this investment pattern.
3.
If any of the instruments mentioned above are rated and their rating falls below investment grade as confirmed by two credit rating agencies then the option of exit can be exercised.
3.
If any of the instruments mentioned above are rated and their rating falls below investment grade as confirmed by two credit rating agencies then the option of exit can be exercised.
4.
This Investment Pattern may be achieved by the end of a financial year.
4.
This Investment Pattern may be achieved by the end of a financial year.
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