EPFO to invest Rs22,500 crore in ETFs this fiscal
New Delhi: The Employees Provident Fund Organisation (EPFO) will park about Rs 22,500 crore in the exchange traded funds this fiscal following the approval of its trustees to enhance investments in equity or equity linked schemes last month, a senior official has said.
Last month, EPFO’s apex decision making body had approved the proposal to increase the investments in exchange traded funds from 10% to 15% of the investible deposits. “The EPFO had invested Rs1.5 lakh crore 2016-17. The investible deposits are also estimated at Rs1.5 lakh crore during the current fiscal. Thus the EPFO investments in exchange traded funds (ETF) in 2016-17 would be about Rs22,500 crore,” EPFO’s Central Provident Fund Commissioner V P Joy said.
Joy further said, “The EPFO has invested Rs23,000 crore in ETFs so far. The annualised return on these investments has been over 12% so far.” The EPFO has an investment mix of government securities, state loans, corporate bonds and others like Special Deposit Scheme (SDS).
The EPFO, however, gets returns even lower than 8% on some of its investments particularly government bonds and schemes.
The EPFO had entered the stock market by investing 5% in the ETFs in August 2015, which was raised to 10% last year. In 2015, the finance ministry had allowed private provident funds to invest 5-15% 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% of its over Rs1 lakh crore investible amount in ETFs.
The retirement fund body has over four crore contributing subscribers and has provided 8.65% rate of interest on PF deposits for 2016-17, a tad lower than 8.8% for 2015-16.