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EPFO likely to increase proportion of ETF investment to UTI Mutual Funds

At present, the Employees' Provident Fund Organisation's 75 per cent ETF investments are handled by SBI Capital, while remaining 25 per cent is managed by UTI Mutual Funds

Press Trust of India  |  New Delhi 

Almost a million payroll additions in September highest in 13 months

Retirement fund body is likely to increase fund allocation to its exchange traded fund manager as it has provided better returns than SBI Capital on by the pension fund.

At present, the Employees' Organisation's 75 per cent ETF investments are handled by SBI Capital, while remaining 25 per cent is managed by

"The proposal to increase the proportion of funds for ETF investments of body through is listed on the agenda of the EPFO's apex decision making body Central Board of Trustees (CBT) headed by labour minister scheduled on Tuesday," a source said.

The source also said, "The UTI Mutual Funds has been providing returns to the on its ETF investments than the body's other ETF manufacturer SBI Capital. Therefore, the is contemplating increase in proportion of funds for such investment for the UTI Mutual Funds".

In the present scenario, the EPFO has invested over Rs 550 billion in the ETFs. As per the investment pattern followed by the EPFO, the body can invest 5 per cent to 15 per cent of its investible deposits every year in equity or equity linked scheme. The body has about Rs 1.5 trillion investible deposits every year.

The EPFO had started investing in the ETF with 5 per cent of its investible deposits in August 2015, which was later on increased to 10 per cent and 15 per cent in 2016-17 and 2017-18, respectively.

Besides, the CBT will also take call on proposal to give extension to its consultant and five fund managers till June 30, 2019.

The body is likely to appoint as its consultant because it has emerged as the successful bidder after the due process. As many as eight players have entered the fray but and could qualify the technical round. However, only Crisil has qualified on the basis of financial parameters.

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The source said,"Since it would take a while to appoint Crisil as consultant, an extension of term till June 30, 2019, is proposed. Once the consultant is appointed, the process for appointing fund managers can be started. Thus its is also proposed extend the term of five fund managers - SBI, ICICI Securities Primary Dealership, Reliance Capital, and till June, 2019".

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The five fund manager had been appointed for a three-year tenure from April 1, 2015, but were previously given extension till June 30, 2018. Thereafter, they got another extension till December, 2018.

The CBT had appointed Crisil as consultant for selection of portfolio managers, custodian and concurrent auditor and performance evaluation of portfolio managers on August 26, 2014.

First Published: Mon, December 03 2018. 21:15 IST
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