EPFO to make its investing debut next month with Rs 5000 crore warchest

Retirement fund body Employees' Provident Fund Organisation (EPFO) will start investing in stock markets from next month as part of its plan to put in as much as Rs 5,000 crore in exchange traded funds (ETFs) by the end of this fiscal.

"We will start investing in Exchange Trade Funds from next month. We have planned to invest 5% of our incremental deposits in ETFs during this fiscal," EPFO's Central Provident Fund Commissioner K K Jalan told PTI.

"EPFO is expected to get about Rs 1 lakh crore as incremental deposits during the current financial year. Thus, we would be able to invest Rs 5,000 crore in ETFs during this fiscal," he added.

The decision was taken on March 31 during a meeting of the Central Board of Trustees (CBT), the apex decision-making body of EPFO. 

The Labour Ministry had given EPFO a notification on April 23 to invest 5% of its corpus into ETFs. So far, the EPFO, which has over six crore subscribers, has only been investing primarily in state and central government securities. The ministry's notification stated that EPFO will invest a minimum of 5% and up to 15% of incremental deposits in equity or equity-related schemes, which was opposed by unionists at the meeting.

For now, the EPFO has decided to park 5% of its incremental deposits in the ETFs during this fiscal.

The new investment pattern for EPFO provides that the body will invest in "shares of body corporates listed on BSE or NSE, which have market capitalisation of not less than Rs 5,000 crore as on the date of investment".

According to the investment norms, the retirement fund body can also invest in units of mutual funds regulated by the Securities Exchange Board of India (Sebi) that have a minimum 65% of their investment in shares of body corporates listed on BSE or NSE.