Retirement fund body EPFO will park about Rs 22,500 crore in the exchange traded funds this fiscal following the approval of its trustees to enhance investments in equity or equity-linked schemes last month, a senior official has said. Last month, the Employees Provident Fund Organisation’s (EPFO) apex decision-making body had approved the proposal to increase the investments in exchange traded funds from 10 per cent to 15 per cent of the investable deposits. “The EPFO had invested Rs 1.5 lakh crore 2016-17. The investible deposits are also estimated at Rs 1.5 lakh crore during the current fiscal. Thus the EPFO investments in ETF in 2016-17 would be about Rs 22,500 crore,” EPFO’s Central Provident Fund Commissioner V P Joy told PTI. Joy further said, “The EPFO has invested Rs 23,000 crore in ETFs so far.
The annualised return on these investments has been over 12 percent so far.” The EPFO has an investment mix of government securities, state loans, corporate bonds and others like Special Deposit Scheme (SDS). The EPFO, however, gets returns even lower than 8 percent on some of its investments particularly government bonds and schemes. The EPFO had entered the stock market by investing 5 percent in the ETFs in August 2015, which was raised to 10 percent last year. 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 percent of it’s over Rs 1 lakh crore investible amount in ETFs. The retirement fund body has over four crore contributing subscribers and has provided 8.65 per cent rate of interest on PF deposits for 2016-17, a tad lower than 8.8 per cent for 2015-16.