EPFO investments in ETFs to be raised beyond 5%
Union Labour Minister Bandaru Dattatreya on Sunday said that EPFO will raise proportion of its investments in exchange traded funds (ETFs) from the present 5 per cent and a final decision on the quantum for 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 this year, amount invested in ETF by Employees' Provident Fund Organisation (EPFO) is Rs 7,468 crore and the market value of this as on date is Rs 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 5 per cent. Now, how much we have to increase I will take a decision after the emergency meeting," Dattatreya said.
"Anyhow the increase will be there and how much increase...within next 15 days we will decide," he added. 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. EPFO had started investing up to five per cent of its investible deposits in ETFs in August last year.
Reacting to a query on opposition by labour unions on the proposal (to increase quantum of investments in ETFs), he said, "They (unions) are saying government should give guarantee. Things are in positive direction and in prevailing market situation it will further more increase. World over investments of social security funds (are) in same pattern (ETFs)." Dattatreya further said the tenure of SBI Mutual Fund as ETF manufacturer 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 Rs 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 "This amount will be withdrawn and invested in ETFs by both SBI Mutual Fund and UTI Mutual Fund," the minister added.