EPFO Can Now Invest in Public Sector InvITs and REITs
The Employees’ Provident Fund Organisation (EPFO) will now be able to invest in units of public sector-sponsored Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs). This significant move, approved by the Central Board of Trustees (CBT) marks a step towards diversifying EPFO’s investments beyond Exchange Traded Funds (ETFs).
This opens up new avenues for the retirement fund body, allowing it to allocate a portion of its funds into these instruments. Previously, EPFO could only invest in ETFs for its equity market exposure, which were restricted to BSE Sensex Index or NSE Nifty 50 Index-based ETFs, predominantly in CPSE ETF and Bharat 22 ETF.
Thisur, EPA Seven Billion Tracking capital gains
REITs andInvITs: Diversifying for the Future
InvITs and REITs are innovative financial vehicles designed to unlock capital in infrastructure and real estate sectors. They function much like mutual funds, pooling investments but focussing on specific sectors. InvITs provide exposure to income-generating infrastructure assets and REITs offer a taste of the commercial real estate market. These instruments have gained traction globally and in India since regulatory frameworks were introduced by SEBI in 2014. As of end-September 2024, the Indian Ind Shekhar was 15 lakhs crore, signifying growing investor confidence
**Other Key Decisions taken by CBT
The CBT also greenlit the EPFO Amnesty Scheme 2024, aiming to encourage employers to voluntarily rectify past non-compliance with the EPF scheme without facing penalties. Simplified procedure forThe framework strives to bring more employees into the fold of social security and foster formalization of jobs.
Further
An amendment was also approved to bring the interest computation for EPF claims in line with the current practices – ensuring the interest is paid to members until the date of settlement, not just
What potential risks are associated with the EPFO’s investment in public InvITs and REITs?
## EPFO Gets Green Light to Invest in Public InvITs and REITs
**Host:** Welcome back to the show. Today, we’re talking about a big change for the Employees’ Provident Fund Organisation, or EPFO. Joining us to discuss this is Alex Reed, a financial analyst specializing in retirement planning. Welcome to the show, Alex Reed.
**Alex Reed:** Thank you for having me.
**Host:** So, let’s jump right in. The EPFO has just been given permission to invest in public sector InvITs and REITs. Can you explain what this means for the average EPFO member?
**Alex Reed:** This is potentially significant news for EPFO members. InvITs and REITs are investment vehicles that own income-generating infrastructure assets like roads, bridges, and power plants for InvITs, and real estate properties for REITs. By investing in these, the EPFO aims to diversify its portfolio and potentially achieve higher returns for its members.
The fact that they’re focusing on public sector sponsored InvITs and REITs means they’re prioritizing investments that are considered to be more stable and have government backing. [[1](https://www.financialexpress.com/money/epfo-to-start-investing-in-invits-reits-leave-out-pvt-sector-trusts-2626548/)]
**Host:** That’s interesting. Are there any potential downsides to this decision?
**Alex Reed:** As with any investment, there are always potential risks. REITs and InvITs can be sensitive to economic downturns and interest rate changes.
Also, it’s important to remember that the EPFO is a long-term investment vehicle, designed for retirement. This move towards alternate assets suggests a shift in investment strategy.
**Host:** What should EPFO members be looking out for as this new investment strategy unfolds?
**Alex Reed:** They should keep an eye on how the EPFO performs in these new asset classes. Transparency is key here. Members should demand clear information on the performance of these investments and how they impact their overall retirement savings.
**Host:** Thank you so much for shedding some light on this, Alex Reed. I think this is a topic that will be closely watched by millions of EPFO members.
**Alex Reed:** My pleasure.
