EPFO to hit stock markets today

This will come as a major boost to India's capital markets which were anticipating such a move for a decade

The Employees’ Provident Fund Organisation (EPFO) will enter the stock markets on Thursday. Labour Minister Bandaru Dattatreya will launch EPFO’s investment in stock markets on Thursday at 11 am in Mumbai. Neither the ministry nor EPFO officials revealed how much would be invested in exchange-traded funds (ETFs) on the inaugural day.

An EPFO official said based on the market conditions, a decision would be taken on Thursday. In FY16, the EPFO will invest around Rs 6,000 crore in ETFs issued by SBI Mutual Fund on a daily basis. An ETF is a security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange.

EPFO has decided to tread cautiously and to invest only in ETFs to begin with. Although its new investment pattern allows it to invest in direct stocks and spend up to 15 per cent into stock markets, its central board of trustees approved investing only five per cent in equities. With total 80 million subscribers, the EPFO’s total corpus is Rs 6 lakh crore.