Decision on increasing EPFO investment in ETFs on July 7
The Finance Ministry had last year notified a new investment pattern for EPFO, allowing the body to invest a minimum of 5 per cent and up to 15 per cent of its funds in equity or equity-related schemes. It invested Rs 6,577 crore, or 5 per cent of the investible surplus, in equities through ETFs during 2015-16.
"As on March 31, 2016 the amount invested was Rs 6,577 crore which gave a return of Rs 6,601 crore, which is up by 0.37 per cent. As on April 30, 2016 the amount invested was Rs 6,674 crore and this gave a return of Rs 6,786 crore which is up by 1.68 per cent," Dattatreya said here on Sunday.
The investments in ETFs are done in NSE and BSE in the ratio of 75 per cent and 25 per cent of the funds invested, respectively.
"We have studied some experts' reports...we will be discussing the performance of investment in ETFs in the forthcoming meeting of the CBT which is going to be held on July 7 in Delhi and we will inform it to the CBT and proceed further.
"As chairman of CBT, I will take a decision on how much it is to be increased from (current) 5 per cent.
"Depending on the situation, we will take the decision on how much funds are to be increased (investments in ETF and shares of PSUs). Most probably...I feel that it may be increased," the minister said.
"Our paramount concern is the safety and security of the corpus. In a cautious manner, we are going for this approach (investment in equities). At the same time, with good planning and safeguards and strict monitoring mechanism, our government has taken a bold decision to invest in ETFs which are considered safe," Dattatreya said.
Moreover, the world over, pension funds' investments in equities are very much higher as these give good returns in long run, he said, adding that equities are considered long- term investments, he said.
CBT comprises representatives of employees, employers and the government and is the apex decision-making body of EPFO with the Labour Minister as its chairman.
In August 2015, the retirement fund body entered the equities market for the first time, channelling its investments through two exchange traded funds.