EPFO investments in ETFs to be raised beyond 5%: Dattatreya

Press Trust of India Hyderabad | Updated on January 27, 2018 Published on August 21, 2016


Union Labour Minister Bandaru Dattatreya today said that EPFO will raise the proportion of its investments in exchange traded funds (ETFs) from the present five per cent and a final decision on the quantum for the current fiscal would be taken very soon.

SBI Mutual Fund and UTI Mutual Fund will manage the corpus of the retirement fund in ETFs, he said.

As on July 31, the amount invested in ETF by Employees’ Provident Fund Organisation (EPFO) is ₹7,468 crore and the market value of this as on date is ₹8,372 crore, which shows a positive return of 12.10 per cent, the Minister said.

“An emergency meeting of Central Board of Trustees (CBT) of EPFO will be convened soon and a final decision on how much (increase in quantum of investments in ETF) percentage will be taken after taking opinion. Earlier, we had gone for five per cent. Now, how much we have to increase, I will take a decision after the emergency meeting,” Dattatreya told PTI.

There will be an increase and its quantum will be decided within the next 15 days, he added.

The Finance Ministry had last year notified a new investment pattern for EPFO, allowing the body to invest a minimum of five per cent and up to 15 per cent of its funds in equity or equity-related schemes. EPFO had started investing up to five per cent of its investible deposits in ETFs in August last year.

Union opposition

Reacting to a query on opposition by labour unions on the proposal (to increase the quantum of investments in ETFs), he said, “They (unions) are saying government should give guarantee. Things are moving in positive direction and in the prevailing market situation it will further increase. World over investments of social security funds (are) in the same pattern (ETFs).”

Dattatreya further said the tenure of SBI Mutual Fund as ETF manager for EPFO lapsed on June 30 and selection of SBI Mutual Fund and UTI Mutual Fund has been done by CBT, adding new investments will restart in ETFs.

“We have not stopped investments in ETFs during the lapsed period and taken care of investment pattern. In the meanwhile, (the period after it expired) funds amounting to ₹900 crore have been parked/invested in Liquid Mutual funds and such funds earned around 7 per cent approximately.

“This amount will be withdrawn and invested in ETFs by both SBI Mutual Fund and UTI Mutual Fund,” the Minister added.

Published on August 21, 2016
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