This is it's first such investment in the stock market since its inception in 1951
Employees Provident Fund Organisation (EPFO)
MUMBAI: The Employees Provident Fund Organisation (EPFO) will invest about Rs 5,000-Rs 6,000 crore in domestic equities during this financial year, it’s first such investment in the stock market since its inception in 1951.
EPFO would invest in equities through the exchange traded fund (ETF) route. For this purpose, SBI ETF Nifty and SBI Sensex ETF are the two index linked ETF schemes chosen from the State Bank of India-promoted SBI Mutual Fund.
While it has a total corpus of Rs 8.5 lakh crore from around 4.5 crore subscribers, the fund has decided to invest only a certain percentage of the incremental inflows. To start with, EPFO will invest up to 5 per cent of the fresh inflows during this financial year. The plan is to gradually scale it up to 15 per cent depending upon the prevailing market conditions.
The central provident fund commissioner K.K. Jalan said that the fund is witnessing an annual inflow in the range of Rs 1 lakh crore to Rs 1.20 lakh crore. Additionally, EPFO also manages funds for several trusts. “So, we will be investing Rs 5,000 crore – Rs 6,000 crore from our corpus and another Rs 2,000 crore – Rs 3,000 crore from the funds we manage for others. This will take our total investment to roughly about Rs 8,000 crore in this fiscal,” he added.
Minister for labour and employment Bandaru Dattatreya said that EPFO has invested only in fixed income securities so far, which has given a moderate rate of return. EPFO provides a fixed return of 8.75 per cent. “Unless we change the investment philosophy, it would be difficult to give superior returns to subscribers. Globally, pension funds are investing certain portion of their corpus in equity,” he said.
( Source : deccan chronicle )
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