No proposal to hike EPFO investment in ETFs: Bandaru Dattatreya

Central Board of Trustees, Employees' Provident Fund has approved investment of only 5% in ETFs

Retirement fund body EPFO is not considering any proposal to increase investments in Exchange Trade Funds (ETFs), Parliament was informed on Monday.

"The Central Board of Trustees (CBT), Employees' Provident Fund (EPF) has approved investment of only 5% in ETFs. At present, there is no proposal under consideration of the government to enhance this limit," Labour Minister Bandaru Dattatreya said in a written reply to Lok Sabha.

As on 30 June, the total amount invested by EPFO in ETFs is Rs 7,468 crore and the absolute return on the investment so far is 7.45%.

The minister had earlier said that there will be a CBT meeting before July 22. 

"We may take a decision on the quantum of investments to be made in ETF. We are in discussions with Bombay and National Stock Exchanges also. The investment will certainly increase (over last year),'' said Dattatreya

"The Finance Ministry gave us clearance to invest from 5 to 15%. It is a long term investment. It may be up to 10 to 12% depending upon the market conditions. We expect the markets would be stabilised in the long run. Markets also need money."

EPFO had started investing ETFs in August last year. Trade Unions have been opposing the decision of the EPFO to invest ETFs in view of volatility in the stock markets.

The minister told the House that as per the pattern of Investment notified by Ministry of Labour & Employment on April 23, 2015, investment in equity and related investments is permitted from 5 to 15%.