EPFO approves diversification of investments up to 5%

EPFO approves diversification of investments up to 5%

The Central Board of Trustees (CBT), the apex decision-making body of the Employees’ Provident Fund Organization (EPFO), took some important decisions regarding investment on Saturday.

The Central Board of EPFO ​​in its 229th meeting today approved investing up to 5% of annual deposits in alternative investments including Infrastructure Investment Trusts (InvITs). money control.

The Central Board of Trustees of EPFO ​​has given in-principle approval for investment in public sector invitations and bonds on a case-by-case basis to be decided by the Finance Investment and Audit Committee (FIAC). Economic Times.

The decisions would mean that the EPFO ​​is diversifying its investments across asset classes which will enhance the return on investment but also carry a fair amount of risk.

So far, the EPFO ​​has invested in Exchange Traded Funds (ETFs) only through ETF makers (SBI-Mutual Fund and UTI-Mutual Fund) and not in individual stocks.

The equity investment of EPFO ​​was Rs 31,025 crore in 2020-21, Rs 32,377 crore in 2019-20 and Rs 27,743 crore in 2018-19.

In April 2021, the labor ministry had notified changes in EPFO ​​investment options to include alternative investment funds.

An Infrastructure Investment Trust (InvIT) is like a mutual fund, which enables direct investment of small amounts from potential individual/institutional investors in infrastructure to earn a small portion of the income as returns.

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