The EPFO recently entered the stock market when they implemented the EPF investment in equity. The organization has planned to invest 5% of its incremental deposits in the Exchange Traded Funds (ETF) for the current fiscal year.
This decision of investment in the ETF was approved by the Central board of trustees of the EPF organization after carefully considering the possible risk which is associated with the investments.
It is said that these investments in the stock markets are not guaranteed by the Government since they are subjected to the market movements. There was also information stating that some of the trade unions had expressed reservations about the decision to invest in equity due to the concern about the risk associated with the stock market.
However, the K K Jalan, who is the Central Provident Fund Commissioner has stated that the volatility of the stock market will not be a big issue since they are looking at a long-term investment for nothing less than 15 years.
Some of the important things about this EPF investment in equities are:
- The EPFO has planned to invest Rs 5,000 crore in this fiscal year. The limit for the current year will be 5 percent of the incremental deposits.
- EPFO funds will be invested through SBI Nifty exchange-traded fund (ETF) and SBI Sensex ETF managed by SBI Mutual Fund.
- There is a scope for further increasing EPFO’s corpus to maximum 15%.