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EPFO enters stock market: 10 things you should know

EPFO will make an initial investment of Rs 5,000 crore this year, which is 5 per cent of its incremental flow.

BT Online Bureau | August 7, 2015 | Updated 16:07 IST
EPFO's Central Provident Fund Commissioner K K Jalan
EPFO's Central Provident Fund Commissioner K K Jalan (Source: Reuters)

With Employees Provident Fund Organisation (EPFO), the state-run pension fund with the largest retirement corpus entering the stock market on Thursday, here are the ten things you should know:

 

  1. EPFO will make an initial investment of Rs 5,000 crore this year, which is 5 per cent of its incremental flow.
  2. The EPFO investment in stock market could go up to Rs 15,000 crore next year.
  3. The investment will be through SBI Mutual Fund's two index-linked ETFs - 75 per cent of the incremental fund will be invested in NSE ETF, the remaining will be made in the BSE ETF. EPFO will not enter the stock market through other ETFs, Labour Minister Bandaru Dattatreya said.
  4. EPFO subscribers would get more than the 8.75 per cent return they earn now by way of annual interest and this may even increase, Dattatreya said.
  5. With increasing its investment limit to 15 per cent, the EPFO could become the second-largest domestic institutional investor in capital markets after LIC, which has invested over Rs 2 lakh crore in the market.
  6. EPFO may also invest in the CPSE ETF, EPFO's Central Provident Fund Commissioner K K Jalan said.
  7. The Finance Ministry has allowed investing 15 per cent of incremental flow of the EPFO money into equities, from the present 5 per cent.
  8. EPFO may invest up to Rs 1 lakh crore of its over Rs 6.6 lakh crore of assets into various government securities.
  9. "Many citizens world over have been able to obtain better returns by investing through stock markets. Using ETF as the vehicle by EPFO for such investment has made the entire process transparent," BSE chief Ashish Kumar Chauhan said.
  10. With the EPFO entering the stock exchange, it would provide assured stable returns for long-term, SBI MF managing director and chief executive Dinesh Khara said.

 

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