BENGALURU: Modi Government has taken a big leap in making new policies for the young and the old. Now the most recent of these has been the consent for Employees’ Provident Fund Organization (EPFO) to invest a proportion of its assets in equity markets, according to Yahoo!Finance. 

Let’s check out the impacts of EPFO On Equity Markets:

1. Why EPFO Matters

EPFO administers compulsory contributory Provident Fund Scheme, Pension Scheme and an Insurance Scheme. It is the largest social security organizations in India in terms of number of covered beneficiaries and the volume of financial transactions undertaken. This new move will allow it to invest 1 percent in equity markets in July and will be increased up to 5 percent by the end of this financial year. Initially the investment would be only in Exchange Traded Funds (ETF’s) which are also a kind of equity funds. 

2. Long-Term Support To The Market

Here, Provident Funds investment is for long-term. People contributing to this fund don’t pull out their investments because it will eventually help them in their retirement. People invest large sums of money in some big companies in order to get returns for a longer period of time. This will also attract other investors to invest in them for huge returns that they receive at a later time.

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