EPFO equity investment better hedge against market up-downs: Sinha

New Delhi, Feb 4 (IANS) Underlining the Employees’ Provident Fund Organisation’s (EPFO) ability to invest in equity markets up to 15 percent, Minister of State for Finance Jayant Sinha on Thursday said the benefit of average costing must be available to those saving for their retirement.

“As you know, there is an ability for EPFO to go up to 15 percent in the equity markets. The benefit of average costing should be available to people saving for retirement because the equity markets will go through ups and downs,” Sinha told reporters on the sidelines of the Pension Fund Regulatory and Development Authority’s (PFRDA) Pension Conclave here.

“There will be bull markets and there will be bear markets but if you follow an average costing approach, you will be building your own position in the market at appropriately low cost when the market is down,” he said.

The EPFO entered the equity market in August last year through the exchange-traded fund route with an initial corpus of Rs.5,000 crore.

The minister said it has been established that systematic investment plans (SIP) and an average costing approach generate the best returns for long-term investors.

“We also need to do make sure that our investors, who are saving for retirement have access to a full range of pension products such as venture capital and private equity which have generated very strong real returns around the world,” he said.

“Those should be available for people saving for their retirement. We have to make sure that people have access to real estate which has also been a very good asset class.

“Global investment products should also be available for our savers so that they can further diversify and improve the risk ratio on their portfolio,” he added.

Sinha also lauded the PFRDA’s National Pension System (NPS) scheme as a wonderful, cost-effective product for pension savings.

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