You consider EPF (or Employee Provident Fund) as a pure debt and risk-free savings option. But in reality, it’s not 100% debt. It has some other assets (like equity) as well. Let’s see where the EPF corpus is invested in India (2022) by the EPFO.
Where is EPF money invested by EPFO?
When your EPF contributions reach EPFO authorities, here is where they can invest them:
- Central & State Government Securities – 45% to 50%
- Debt instruments like bonds, etc. of Banks, Corporates, financial institutions, debt funds – 35-45%
- Money market instruments / term deposits – 5%
- Equity (via ETFs like Nifty50, Sensex, CPSE, Bharat 22 ETFs only) – maximum of 15%
- Others (REIT, misc., etc.) – 5%
Updated (2022) – EPFO plans to hike equity investment limit from 15% to 25% soon. This is being explored to bridge the shortfall in returns in recent times from the non-equity part of the corpus. Before August 2015, EPF money did not have any equity component. Equity ETF investments were started by EPF only from August 2015 onwards. Initially with 5% of the incremental annual investments. In September 2016, the allocation was increased to 10% and then again in 2017, it was further raised to 15%.
All the above-specified limits are applicable only on fresh accruals (contributions coming in) to the fund. It is not on the full corpus. Understand it like this – assume the total EPF corpus in the country is Rs 10,000. Now, every month via salary deductions, EPFO gets fresh incremental flows of Rs 100. So the 15% equity investment limit is for Rs 100 monthly flow (i.e. Rs 15 only) and not the entire Rs 10,000 corpus.
markets in addition to regular SIP flows in India (currently about Rs 11-12,000 crore monthly).
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