FinMin suggests allowing EPFO to invest 30% in equity market
26/06/2014 17:19
The Finance Ministry has proposed allowing retirement and gratuity funds to invest up to 30 per cent of their money in the equity market, a suggestion that’s likely to be opposed by labour unions, reported PTI. According to the proposals, non-government provident, pension and gratuity funds can invest up to 15 per cent in shares of companies that have derivatives or in mutual funds. As much as 15 per cent can be invested in exchange traded funds, index funds that replicate the portfolios of the Sensex or Nifty, or derivatives including credit default swaps. The funds will be permitted to invest up to 40 per cent in government securities. However, worker groups including the Bharatiya Mazdoor Sangh (BMS) and the All India Trade Union Congress have decided to oppose any move to allow the Employees’ Provident Fund Organisation (EPFO) to invest part of the over Rs 5 lakh crore it holds in the equity market. “Earlier, we opposed any investment by EPFO in the equity market. We will oppose it again as it is poor workers’ money,” BMS All India General Secretary Virjesh Upadhya said. According to the draft proposals, index funds replicating Sensex or Nifty portfolios should be constructed “in such a manner that investment in securities may be in the same weightage comprising an index.” The Finance Ministry has suggested certain filters to minimise market risks. It proposes that fund managers should invest in mutual funds, ETFs or index funds directly so that the double incidence of cost is avoided. If an instrument falls below investment grade confirmed by one agency, the option to exit should be exercised in the interests of subscribers. Comments on the proposed modification in investment norms may be sent up to July 21, added the media report.
26/06/2014 17:19
The Finance Ministry has proposed allowing retirement and gratuity funds to invest up to 30 per cent of their money in the equity market, a suggestion that’s likely to be opposed by labour unions, reported PTI. According to the proposals, non-government provident, pension and gratuity funds can invest up to 15 per cent in shares of companies that have derivatives or in mutual funds. As much as 15 per cent can be invested in exchange traded funds, index funds that replicate the portfolios of the Sensex or Nifty, or derivatives including credit default swaps. The funds will be permitted to invest up to 40 per cent in government securities. However, worker groups including the Bharatiya Mazdoor Sangh (BMS) and the All India Trade Union Congress have decided to oppose any move to allow the Employees’ Provident Fund Organisation (EPFO) to invest part of the over Rs 5 lakh crore it holds in the equity market. “Earlier, we opposed any investment by EPFO in the equity market. We will oppose it again as it is poor workers’ money,” BMS All India General Secretary Virjesh Upadhya said. According to the draft proposals, index funds replicating Sensex or Nifty portfolios should be constructed “in such a manner that investment in securities may be in the same weightage comprising an index.” The Finance Ministry has suggested certain filters to minimise market risks. It proposes that fund managers should invest in mutual funds, ETFs or index funds directly so that the double incidence of cost is avoided. If an instrument falls below investment grade confirmed by one agency, the option to exit should be exercised in the interests of subscribers. Comments on the proposed modification in investment norms may be sent up to July 21, added the media report.
