The Employees Provident Fund Organisation has started looking for options to park 3-5 per cent of its huge corpus of Rs 2.57 lakh crore of retirement funds in stock markets to earn better returns.
“Index based strategy for investment in equities would be most suitable for EPFO’s need”, said an EPFO official in a presentation before the Finance and Investment Committee (FIC) recently.
The proposal, if accepted, could result an inflow of Rs 13,000 crore into the capital market. The EPFO, managing retirement fund of about 4.5 crore depositors, has not invested in stock markets so far.
It was felt at the FIC that alternative avenues are a must to enhance or maintain overall returns to subscribers as fixed income products would go down in future as evident in the developed economies.
Investment in equities provides a good hedge against inflation, unlike fixed income securities, the official said in the presentation. That means equities investment is better than fixed income securities.