After Tirupati Balaji, another new kid enters the stock market game.
EPFO plans to invest in stocks for the first time in its 65 year old history. A percent of new inflows will be invested in index funds this year:
In a historic move, the Employees Provident Fund Organisation (EPFO) has commenced investing into Indian stock markets, a move aimed at generating inflation-beating returns in the long term. The move has come after 65 years of the retirement fund body’s inception.
The organisation, which has a corpus of about Rs 6.5 lakh crore, plans to invest Rs 5,000 crore or five per cent of its incremental inflow in the current financial year. The government has permitted EPFO to invest 15 per cent of its incremental inflow in stocks but the latter would like to reach that level in stages.
EPFO has chosen two index-linked exchange traded fund schemes — SBI Nifty ETF and SBI Sensex ETF — to invest its funds. About 75 per cent of the investment will be done through the former and and 25 per cent through the latter. SBI Mutual Fund is sponsored by India’s largest lender, State Bank of India, sole manager of EPFO’s corpus thus far.
Pension funds are really huge and just a trickle from them goes a long way in boosting inflows in Indian equity market.