EPFO organisation has began their investments in the Equity markets, to invest upto 15% of the corpus into Equity. To start with they will be doing it though ETF's only and they have opted to invest in the PSU ETF's. The confidence that our decision makers have on the PSU's is enormous, while the PSU's are deemed to be the worst wealth growers. The EPFO feels that they will be safe with PSU's, & in fact this feature of safety and the fear of losses are the reason why Insurance investments are giving the lowest returns.
But, to some extent, safety is required as the funds are required to meet emergencies, else the confidence on the whose system will diminish. Soon, with the experience of having better returns from Equity will help them take the decision to buy direct equities and also into companies that are doing well and not only into PSU's With about 1.00 lakh crores coming into EPFO per annum, in few years from now,
Indian Equity markets will be a behemoth on their own very soon & need not be dependent on FII's for money to fuel the markets and not fear about the major sell offs that FII's do at one clip. At the lowest allowed exposure of 5% of the corpus per annum itself will bring in 30K crores into the capital markets.
Returns on PPF investments will now show an uptick and this will fuel competition for advisors & fund managers to show better return possibilities on their managed funds to have an edge and have bigger AUM's. All these competition will improve the quality and eliminate weaker hands, all of it is good news on the whole.
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