EPFO to invest in stock Markets
With an aim to make maximum returns and considering Inflation, Employee Provident Fund Organisation(EPFO) will start investing in Indian Stock Markets.
EPFO is planning to invest Rs. 5000 crore out of Rs 6.5 Lakh crores balance, or 5% of its incremental inflow in current financial year.Government has given permission for investment upto 15%.
EPFO will invest through Exchange traded fund schemes.As of now it has chosen two index to invest funds
1.SBI Nifty ETF- 75 % of investment via this scheme
2. SBI Sensex ETF-25% of investment will be done by this route
EPFO investments will be through SBI Mutual funds which is sponsored by SBI, the largest lender so far.
Returns from EPFO fixed income securities used to vary from 85% to 9.5%.This is a welcome & innovative change to beat Inflation in Economy.
Lets discuss, What is ETF route?
A one of the most conservative & safest way to invest in Equity stocks.
An ETF, or exchange traded fund, is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund. They are traded as a common stocks on a stock exchange, ths they are traded(bought and sold) daily they do have fluctuating prices like stocks.
ETFs typically have higher daily liquidity and lower fees than mutual fund shares, making them an attractive alternative for investors.Investors receives benefit of dividends,profits,interest or residual value of funds are liquidtaed similar to share holders.
Shareholders indirectly own these assets,they do not directly own or have any direct claim to the underlying investments in the funds.ETF shares are traded on public stock exchanges.