EPFO trustees likely to raise ETF investment limit to 15% on 27 May

EPFO’s move to raise the investment limit in exchange traded funds to 15% from 10%, will help the retirement fund body park Rs15,000 crore in stock markets in FY18

PTI May 15, 2017 12:52:15 IST
EPFO trustees likely to raise ETF investment limit to 15% on 27 May

New Delhi: The trustees of retirement fund body Employees’ Provident Fund Organisation (EPFO) are likely to raise the investment limit in exchange traded funds (ETFs) to 15 percent of the investible deposits, from 10 percent at present, in the current fiscal.

EPFO trustees likely to raise ETF investment limit to 15 on 27 May

Representational image- Reuters

The higher limit would help the EPFO park around Rs15,000 crore in stock markets in 2017-18 as its investible deposits are close to Rs1 lakh crore annually.

“The EPFO’s apex decision making body, the Central Board of Trustees, headed by the labour minister, is likely to increase ETF investments to 15 percent for this fiscal,” a person privy of the development said.

CBT had met on 12 April, where the proposal was discussed in the presence of labour minister Bandaru Dattatreya. It deferred the proposal as some of the employees’ representatives had pressed for vetting the move by EPFO’s advisory body Finance Audit and Investment (FAIC) committee.

They had also raised the issue of having a definitive exit policy to liquidate investments in government securities, ETFs and state loans to maximise returns for its members. The person said that the FAIC meeting is being scheduled on 19 May where the EPFO would also be ready with the exit policy for its investments so that proportion of ETF investments can be raised smoothly in the CBT meeting on 27 May.

EPFO had entered the stock market by investing 5 percent in August 2015, which was raised to 10% last year. In 2015, the finance ministry had allowed private provident funds to invest 5-15 percent of its investible deposits in equity or equity-linked schemes.

In view of the volatile nature of stock markets, the EPFO had then decided to start with investing just 5 percent of its over Rs1 lakh crore investible amount in ETFs. The EPFO has invested Rs18,069 crore in ETFs till 18 February 2017 and yielded a return of 18.13 percent on these investments.

Earlier, Dattatreya had indicated that the EPFO will increase its investment in ETFs in view of good returns. The person said the CBT can also enhance the wage ceiling for coverage under the EPFO schemes to Rs25,000 per month from existing Rs15,000. It is estimated that this could bring in one crore more workers under the social security schemes run by the EPFO.

Updated Date:

Subscribe to Moneycontrol Pro at ₹499 for the first year. Use code PRO499. Limited period offer. *T&C apply

also read

EPFO cuts interest rate to 8.55% from 8.65%, bank deposits unattractive, LTCG on stocks; it is no good time for savers
Business

EPFO cuts interest rate to 8.55% from 8.65%, bank deposits unattractive, LTCG on stocks; it is no good time for savers

It is a stated policy of the government to bring down small savings rates to align with the bank deposit rates

EPFO likely to appoint HSBC AMC, UTI AMC, SBI Mutual Fund as fund mangers for three-year term
Business

EPFO likely to appoint HSBC AMC, UTI AMC, SBI Mutual Fund as fund mangers for three-year term

Retirement fund manager EPFO is likely to appoint next week at its trustees' meet asset management firms HSBC AMC, UTI AMC and SBI Mutual Fund as its fund managers for a three-year term

Govt says EPFO investments in equities fetched over 12% return in a year
Business

Govt says EPFO investments in equities fetched over 12% return in a year

EPFO started investing in exchange traded funds (ETFs) in August last year and has invested Rs 7,465 crore till 30 June, 2016