Never miss a great news story!
Get instant notifications from Economic Times
AllowNot now


You can switch off notifications anytime using browser settings.

Personal Finance News

11,588.35-73.5
Stock Analysis, IPO, Mutual Funds, Bonds & More

No investment in group cos, EPFO to portfolio managers

In the past, cross investments by asset managers has led to value erosion.

, ET Bureau|
Jun 19, 2019, 09.23 AM IST
0Comments
Getty Images
Should I alter my mutual fund portfolio?
“We have floated RFP to select portfolio managers,” said Prabhakar Banasure, a member of the Central Board of Trustees (CBT) confirming the matter.
Mumbai: India’s Employees’ Provident Fund Organisation (EPFO) has barred its private sector asset managers from investing the retirement corpus in group companies as some cross investments in recent past have led to some value erosion.

The apex retirement body floated a ‘Request for Proposal’ (RFP) last week as four mutual funds, including Aditya Birla MF, SBI MF, Reliance Nippon Life Asset Management and UTI MF, bid to be portfolio managers, three market sources told ET. Individual funds could not be contacted immediately for comments.

“We have floated RFP to select portfolio managers,” said Prabhakar Banasure, a member of the Central Board of Trustees (CBT) confirming the matter. “Some mutual funds have already bid for it and we will finalise it towards the end of the month.”

“This time we have added a few new benchmarks like banning investment in portfolio manager’s group company,” he told ET.

Last financial year, SBI MF, Reliance MF, HSBC AMC, ICICI Securities Primary Dealership and UTI AMC were fund managers of the EPFO. They managed thousands of crores on behalf of the country’s largest debt investor.

Reliance AMC took a call to invest in Reliance Capital, where the investment call went wrong, sources said. EPFO has an exposure of about Rs 2,500 crore in Anil Dhirubhai Ambani group of companies of which a fifth were in Reliance Capital securities. “This was the genesis of such new provision, which may also change once the crisis eases,” said one of the persons cited above.

About a month ago, ratings company CARE downgraded Reliance Capital’s debt securities to ‘BBB’ from ‘A’ citing defaults by two of its subsidiaries — Reliance Home Finance (RHFL) and Reliance Commercial Finance (RCFL). CARE also said it would keep the firm on credit watch with developing implications. The same company was rated triple-A (SO) a few years earlier.

The retirement fund is not mandated to invest in any corporate bonds rated below AA+, the central board of trustees told portfolio managers seeking explanation behind this move. “Portfolio managers have met Reliance Capital management to get clarity on repayments, which has added some confidence to the board of trustees,” said an executive involved in the process.

Also Read

ED attaches assets of EPFO officials in PMLA case

EPFO backs plan to allow subscribers’ NPS switch

Does pension from EPFO qualify for standard deduction?

Rules for recruitment of hindi translators in EPFO notified

EPFO in talks with NHAI to enhance funding for road projects

Comments
Add Your Comments
Commenting feature is disabled in your country/region.
Download The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.

Other useful Links


Follow us on


Download et app


Copyright © 2019 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service