EPFO mulls increasing equity investment to 25 pc

The matter was discussed by the Finance Investment and Audit Committee in a meeting two weeks ago.

The proposal is expected to be taken up by the EPFO Central Board of Trustees in the last week of June.

According to the proposal, the equity exposure will be raised and investment guidelines will be revised to diversify the portfolio between equity and debt proportionately.

After the meeting, the recommendations will be sent to labour and finance ministries for final approval.

If the recommendation is approved, the EPFO will invest nearly Rs 3,000 crore in the equity market every month.

The EPFO CBT is weighing the proposal to raise exposure in the stock market as the 85:15 debt to equity exposure doesn't leave the portfolio managers with many options and a higher return cannot be obtained.

At present, EPFO invests in equity via exchange traded funds (ETFs).

Its earning can go up to 9-10 percent with its increased investment in equity whereas debt investments would give only 6-7 percent, according to a Mint report.

At present, EPFO has a corpus of about Rs 17 trillion with Rs 14.46 trillion invested in debt and equity investments, where exposure is comparitively recent, are worth Rs 1.23 trillion.