Why has EPFO decided to invest in InvITs and REITs?

The decision to invest in these instruments is part of EPFO's strategy to diversify its investment portfolio beyond traditional options like Exchange Traded Funds (ETFs). By including InvITs and REITs, EPFO aims to tap into the growing infrastructure and real estate sectors, potentially enhancing returns for its subscribers.

What guidelines has EPFO established for these investments?

EPFO's Central Board of Trustees (CBT) has approved specific guidelines for investing in units issued by PSU-sponsored InvITs and REITs. These guidelines ensure that investments are made prudently, focusing on fully operational assets to mitigate risks.

Are private sector InvITs and REITs included in EPFO's investment plans?

Currently, EPFO's investment in InvITs and REITs is limited to those sponsored by Public Sector Undertakings. Private sector trusts are not included in this investment strategy at this time.

How might these investments impact EPFO subscribers?

By diversifying into InvITs and REITs, EPFO aims to enhance the overall returns on its investment portfolio, which could lead to better interest rates for subscribers. However, as with all investments, these come with their own set of risks and rewards.

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Can PF Investments Now Be Made In InvITs & REITs? What You Need To Know?

Q: What are InvITs and REITs?

InvITs are investment vehicles that enable individual and institutional investors to invest in infrastructure projects, such as highways and power transmission lines, generating income through these assets. REITs function similarly but focus on real estate properties, allowing investments in income-generating real estate assets like commercial buildings and office spaces.

Pragya Pathak

Author

Updated: 28-01-2025 at 7:23 AM

Can PF Investments Now Be Made In InvITs & REITs? What You Need To Know?

Provident Fund (PF) is one of the long-standing safe financial options most people opt for to secure their futures. The Employee Provident Fund Organisation (EPFO) supervises the provident fund in India and one of its main objectives is to revise and update related policies for the betterment of people. Recently, a major update has been announced regarding the investment of PFs.

Recently, the Central Board of Trustees (CBT) of the Employee Provident Fund Organisation decided and announced that from now on, people would be able to invest funds from their respective PFs in units of public sector-sponsored Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs). This is an exceptional amendment introduced by the EPFO which would give people more choices regarding their provident funds, especially investing in InvITs and REITs as the infrastructure and real estate sector is growing exponentially.

What Is The New Update?

The Central Board of Trustees (CBT) of the Employee Provident Fund Organisation has declared that people with provident funds would now have the option and liberty of investing their funds in units of public sector-sponsored Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs).

This would enhance the previously limited options that relied on the Exchange Traded Funds (ETFs). The allowance of investing 5 to 15% of funds through ETF was taken in 2015 followed by the formation of an interest account for ETF investment in Central Public Sector Enterprises (CPSEs). The investments in ETFs are working as per the BSE Sensex or NSE Nifty 50 Index and till March 2024, the investment amount totals up to Rs. 2.4 lakh crore.

What Are InvITs and REITs?

Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) are ways through which one can invest in the infrastructure and real estate sectors. People can now invest in assets that generate income, specifically infrastructural projects and real estate projects which have proven themselves to be as profitable as one desires. The main difference between Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) is mentioned below:

Infrastructure Investment Trusts: Through InvITs, people can invest in infrastructural projects like the construction of highways and earn a higher return.
Real Estate Investment Trusts: Through REITs, people can invest in the real estate sector such as building commercial buildings, and earn a higher return thereafter.

Conclusion

The latest decision taken by the Central Board of Trustees (CBT) of the Employee Provident Fund Organisation would prove itself to be effective as it gives more options and the freedom to choose to the people with provident funds. Some changes are long awaited and this is one of them.

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