Decision soon on increasing EPFO investments in ETFs: Bandaru Dattatreya

Dattatreya said that the government made an investment of Rs 7,000 crore till May 31 this year, 75% in National Stock Exchange and 25% in BSE

Noting that Employees' Provident Fund Organisation's (EPFO's) investments in Exchange Traded Funds (ETFs) have given good returns during March and April this year, Union Labour Minister Bandaru Dattatreya today said these investments would be increased and the quantum for coming year would be decided soon.

"On March 31, 2016, we invested an amount of Rs 6,577 crore which gave return of Rs 6,601 crore, which is 0.37% increase. On April 30, 2016, the amount we invested was Rs 6,674 crore which gave return of Rs 6,786 crore. It is up to 1.68% plus (gain)," Dattatreya told reporters here.

Observing that the good investments should dispel any apprehensions about the EPFO funds being invested in the ETFs, he said the Labour Ministry would deliberate on the matter after he returns from the International Labour Conference to be held in Geneva for three days from tomorrow.

"Why I am explaining is, by investment pattern, we are increasing our profits. That's why there will not be any apprehensions. By investing in ETFs, there will not be a loss. Number two, world over, the fund management is done by equity participation which is giving higher interest rate. That means good returns are coming," he said.

"We have option (to invest) up to 5 to 15%. So far we have gone (invested) to 5%. Now, after coming from Geneva, my ministry will sit to decide further more to increase the investment in the coming year," he added.

The government made an investment of Rs 7,000 crore till May 31 this year, 75% in National Stock Exchange and 25% in BSE, he said.

Recalling that the Finance Ministry issued a notification for 5 to 15% of equity participation, he said a decision was taken to invest 5% during 2015-16.

"The Ministry of Finance issued a notification that we can do (investments) in Exchange Traded Funds between 5 to 15%. Accordingly, in 2015-16, we will do 5% investment of the amount we get every year. In 2015-16, we got an amount of Rs 1,15,000 crore. We decided to invest 5% of that," Dattatreya said.

The corpus fund available with EPFO presently is Rs 7,53,000 crore.

Replying to a query, he expressed hope that the EPF interest rate of 8.8% (for 2015-16) would not come down next year.