EPFO to consider investments of up to 15 per cent in ETFs

In 2015, finance ministry had allowed PPFs to invest 5-15% of its investible deposits in equity

Retirement fund body EPFO trustees will meet on March 30 to discuss whether to increase its investments in ETFs to 15 per cent of investible deposits in 2017-18, from the current 10 per cent.

The Employees' Provident Fund Organisation (EPFO) had entered the stock market by investing 5 per cent in August 2015, which was raised to 10 per cent last year.

"Now buoyed by the performance of the stock market and expected good returns on such investments, the EPFO's apex decision-making body the Central Board of Trustees will deliberate on further increasing the flow of its funds into ETFs at a meeting scheduled on March 30, 2017," a source said.

The source said the status note on the ETF investments by EPFO is listed on additional agenda of the CBT meeting next Thursday.

Earlier in 2015, the finance ministry had allowed private provident funds to invest 5-15 per cent 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 per cent of its over Rs 1 lakh crore investible amount in ETFs.

"We are proposing to invest up to 15 per cent during the next year. The CBT meeting will be held on March 30. We will seek its opinion. So far, during the past one-and-a-half year, we invested Rs 18,069 crore. We are getting good yield. It is encouraging," Labour Minister Bandaru Dattatreya had told PTI last week.

The minister had said that so far in the current year, the PF body invested the amount in the two index-linked ETFs — the BSE's Sensex and the NSE's Nifty, which yielded a return of 18.13 per cent.

According to the statement in the Rajya Sabha yesterday, the total amount invested by the EPFO in ETFs as on February 18 is Rs 18,609 crore — Nifty 50 and Sensex index based ETFs: Rs 17,105 crore and CPSE index based ETF: Rs 1,504 crore.