EPFO kicks off stock mkt foray

Chooses SBI MF index funds

EPFO kicks off stock mkt foray

Employees who contribute towards the employee provident fund can look forward to some better returns going forward. 

The Employee Provident Fund Organisation (EPFO) has decided to invest around Rs 5,000 cr-Rs 7,000 cr in the stock markets through the exchange traded funds of SBI Mutual Fund. ETFs track the major two bourses of India namely the National Stock Exchange and the Bombay Stock Exchange.

“EPFO used to invest only in fixed income securities earlier in which the returns were moderate and difficult to beat inflation. EPFO has now taken the first step towards enhancing returns by investing in ETFs,” minister of state for labour and employment Bandaru Dattatreya said.

There have been concerns over the safety and security of the investments and this decision has been taken in the best interests of the subscriber and the nation, Dattatreya added.

EPFO plans to invest Rs 5,000-Rs 7,000 crore in ETFs in a phased manner. This corpus will have incremental money coming into EPFO as well as incremental money from managed trusts by EPFO. While 75 per cent of the corpus will be invested in NSE ETF, 25 per cent of the corpus will be invested in BSE ETF. 

Existing corpus

It will also look at investing in the Central Public Sector Enterprises (CPSE) ETF as and when it comes up. EPFO is not looking at  any other instruments apart from equity for investments. The existing corpus of Rs 8.5 lakh crore of EPFO will not be used for investments into ETFs.

According to Dattatreya, EPFO will also consider raising the cap of investing 5 per cent of the incremental flows into equity markets as and when required.

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