Keen on diversifying its investments in exchange-traded funds, the Employees’ Provident Fund Organisation is considering investing in Nifty Next 50 and Sensex Next 50.
Keen on diversifying its investments in exchange-traded funds (ETFs), the Employees’ Provident Fund Organisation (EPFO) is considering investing in Nifty Next 50 and Sensex Next 50, as these indices have historically yielded higher returns than Nifty 50 and Sensex 50 stocks, where the retirement fund has been investing since its debut in the market in 2015.
Sources said the proposal was put up for discussion and approval before the Central Board of Trustees (CBT) last month, but the apex body wanted to further examine the matter. After CBT’s approval, the EPFO would need to get the government’s nod to include new indices in the notified pattern of investment.
While EPFO’s return from equity investments had been around 20% until February 21, 2018, the retirement fund body wanted to widen the basket to optimise return with minimum risk. The EPFO currently invests 15% of its annual incremental receipts of `1.5 lakh crore, from over five crore active subscribers, in the stock market through ETFs.
Sensing that it would need to invest more to ensure a similar kind of returns to its subscribers in the falling interest regime, the retirement fund invited suggestions from Asia Index, a 50:50 JV between S&P Dow Jones Indices, the BSE India and India Index Services & Products, a subsidiary of the NSE, to guide it on broadening the basket.
Source: Financial Express