The apex retirement fund regulator EPFO have began to invest in capital markets for the first time ever, however, the regulator SEBI has invited for similar investments by other pension funds as well.
Welcoming the EPFO decision to invest five per cent of its incremental deposits into capital markets through Exchange Traded Funds (ETFs), other pension funds should also look at investing in markets.
“This is a very good development that 5 per cent of the Employee Provident Fund Organisation’s incremental deposits will come into capital markets.
EPFO has a huge corpus of about Rs 6.5 lakh crore, out of which it has an incremental deposit of about Rs 1 lakh crore.While Labour Ministry also issued a notification in April to allow EPFO to invest a part of its funds in stock markets, a similar notification for private provident funds was issued in June. However, trustees of individual funds would need to take a final decision before investing in the stock market.
The EPFO expects that it has a huge potential of becoming the largest domestic investor in terms of making investments in the stock market in the years to come.
