New Delhi: The retirement fund manager Employees’ Provident Fund Organisation (EPFO) is likely to start investing a portion of its annual deposits in Infrastructure Investment Trusts (InvITs).
The government has allowed EPFO to invest a part of its corpus in these instruments.
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The EPFO's move to invest in InvITs is aimed at boosting investments in infrastructure. Moreover, this will also help the retirement fund manager to expand the scope of its investment beyond bonds, government securities, and exchange-traded funds (ETFs), officials told Mint.
"Among Alternative Investment Funds (AIF), InvITs are a good option. There is a demand for long-term funds in the larger infrastructure sector. It also offers a diverse mix to EPFO to look beyond its traditional investment vehicles," one of the officials told Mint.
An Infrastructure Investment Trust (InvITs) is like a mutual fund, which enables direct investment of small amounts of money from possible individual/institutional investors in infrastructure to earn a small portion of the income as a return. InvITs work like mutual funds or real estate investment trusts (REITs) in features.
Infrastructure funds, SME funds, and social venture funds are some of the options in the category one segment of the AIF and are governed by SEBI. The government has allowed EPFO to invest a part of its corpus in these instruments, the report said.
The government has allowed EPFO to invest in category 1 and 2 segments of alternate investment funds. InvITs are gaining popularity in a way as a preferred route for investors to monetize assets.
"Though InvITs are available in private and PSU space, EPFO can weigh the options and may look at PSU InvIT if our central board decides to look at only the government sector," the second official told Mint.