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EPFO users may get an option to increase or decrease investments in ETFs

It approved a plan to create a reserve fund for its equity investments to shield subscribers from market volatility

Somesh Jha  |  New Delhi 

EPFO users may get an option to increase or decrease investments in ETFs

The subscribers to the (EPFO) may soon get an option to increase or decrease investments in exchange-traded funds (ETFs).

The also approved a plan to create a reserve fund for its equity investments to shield the subscribers from volatility.

Besides, the EPFO’s Central Board of Trustees (CBT), chaired by Labour and Employment Minister Santosh Kumar Gangwar, met on Friday and approved changes to the accounting policy of in equity.

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The CBT also approved the recommendation of the finance and audit committee, the EPFO’s advisory body, which suggested that the subscribers be allocated equity units only for 15 per cent of their contributions and all units over and above this allocation would be held by the EPFO, a statement issued by the said.

“A separate reserve fund for smoothening out volatility of equity returns and to provide equitable returns to all the subscribers needs to be created,” a statement issued by the said. Central Provident Fund Commissioner V P Joy said a committee had been formed to decide the modalities of creating a reserve fund for equity investments. The invests up to 15 per cent of the subscribers’ incremental deposits in ETFs. The has been investing in ETFs since August 2015 and has invested around Rs 420 billion in the equity instrument so far, giving a return of 17 per cent till February 28 this year.

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The EPFO’s decision follows a suggestion by the to create a reserve fund for its investments in various instruments such as equity and bonds. For the past few years, the has been asking the to create a reserve fund and offer lower interest rates to ensure it does not suffer losses due to market volatility.


(With inputs from PTI)

First Published: Sat, April 14 2018. 01:54 IST
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