Investment options: EPFO’s board of directors will meet on November 20
The Central Board of Directors (CBT) of the Employee Provident Fund Organization (EPFO) will meet on November 20 to discuss, among other things, available untapped investment options to take advantage of the dynamic stock market.
According to the notified investment model, EPFO may invest its additional deposits, amounting to around Rs 1.8 lakh crore per year, between 45% -50% in government securities, 35-45% in debt securities , up to 5% in short-circuit debt securities, between 5 and 15% in equities and up to 5% in asset-backed, trust-structured and miscellaneous investments.
The category of asset-backed, trust-structured and miscellaneous investments was changed in April of this year to make way for investments in units issued by regulated Class I and II Alternative Investment Funds (AIFs). by the Securities and Exchange Board of India (Sebi).
The category already permitted under this option includes commercial mortgage securities or residential mortgage securities, units issued by real estate investment trusts (REITs), asset-backed securities and units of infrastructure investment trusts ( InvIT) regulated by the market regulator. . EPFO has not yet exercised these options.
Last month, EPFO managers and advisers made a presentation to FIAC members on the opportunities for such investments, returns and risks.
At the next meeting of the CBT, a tripartite body involving government, workers and employer representatives, the discussion will focus on how return on investment can be maximized by using available options that will be less risky and at the same time. time, more profitable. accretive.
“This is necessary to ensure better returns for subscribers. Higher returns will only be possible if you invest in new investment vehicles, ”a senior government official said. During the last two years, EPFO has paid 8.5% interest to its subscribers on their accumulated deposits with the Employee Provident Fund (EPF). This is higher than many small savings plans.
The BCT will also discuss ways and means of diversification funds in corporate bonds and public sector bonds.
“We will be looking at less risky investments like InvITs sponsored by government entities such as PGCIL and NHAI. At the same time, the authority should not miss the opportunity to earn higher returns in a buoyant market, ”he said.
Another source said that although EPFO has the option of investing up to 15% of additional deposits in stocks, only around 5-7% is invested in stocks. This will also be on the agenda for discussions within the CBT.