In a landmark reform this year, the conservative Employees’ Provident Fund Organisation (EPFO) decided to invest in the stock market, through the passively managed exchange-traded funds (ETFs).
For a long-term retirement vehicle like the EPF, equity is best suited to deliver a real rate of return (post-inflation) over the long term. But even in its decision to dabble in equities, EPFO has been cautious by opting for ETFs. Passive funds have two important benefits: low costs and no fund manager risk.