EPFO may invest up to 15% of investable amount in equity markets

The Employees Provident Fund Organisation (EPFO) proposes to invest up to 15 per cent of its investable amount in equity markets during the next fiscal, which could give a further boost to an already buoyant market.

Reports quoting union labour minister Bandaru Dattatreya said his ministry has proposed to invest up to 15 per cent of investible corpus of the EPFO fund in equity markets during the next year.

The Central Board of Trustees (CBT) of EPFO is meeting on 30 March to decide on the proposal, the minister said.

In September 2016, EPFO had raised its minimum equity investment to 10 per cent. Dattatreya said the decision had been taken considering the good returns on EPFO's investment in exchange-traded funds (ETFs) and this hike in investment limit to 10 per cent will result in additional investment of Rs13,000 crore in stock markets in the current financial year.

So far, during the past one-and-half year, EPFO has invested Rs18,069 crore in exchange traded funds and, Dattatraya said, the yields were encouraging.

Dattatreya said the EPFO through fund managers had invested Rs14,700 crore in ETFs in the current financial year. The provident fund body has so far this year invested in two index-linked ETFs -- the BSE's Sensex and the NSE's Nifty - which yielded a return of 18.13 per cent.

He said the investment proposal will be put in the CBT meeting to be held on 30 March for the final call.

A senior official said the finance ministry has given its nod for EPFO to raise its equity investments from 5 per cent to 15 per cent of the investable income of the organisation every year.

Investable income is the net income of the EPFO from the investments it had already made in various forms and fresh contributions to the fund.

This year the investable income would be about Rs1,40,000 crore, the official said.

The EPFO had started investing in ETFs in August 2015. EPFO manages a corpus of over Rs8,00,000 crore.