Employees' Provident Fund Organisation (EPFO) invested Rs 2,322.1 crore in ETFs in August-October period through SBI Mutual Funds in Sensex and Nifty.
Retirement fund manager EPFO has invested Rs 2,322.1 crore in exchange traded funds (ETF) till October as part of its planned investment of Rs 5,000 crore in equities this fiscal.
The Employees’ Provident Fund Organisation (EPFO) invested Rs 2,322.1 crore in ETFs in August-October period through SBI Mutual Funds in Sensex and Nifty.
The EPFO’s apex decision making body, the Central Board of Trustees’ (CBT) headed by Labour Minister, will review these investments during its meeting scheduled on November 24.
The CBT has decided to invest in ETFs which are considered safer than making investments in single equity shares of a company. Trade unionist on its board had opposed the move in view of volatility of stock markets.
Being cautious on investment in stock market, EPFO decided to invest 5 per cent of its incremental deposits in the ETFs during the current fiscal.
EPFO is estimated to receive about Rs 1 lakh crore as incremental deposits during 2015-16. Thus, it may end up investing around Rs 5,000 crore in stock market this fiscal.
The retirement fund body entered the stock market on August 6 this year after government notified new investment norm allowing it to invest minimum of 5 per cent and up to 15 per cent of its incremental deposits in equity or equity related schemes.
According to financial advisors of EPFO, the long term investment in equity or equity related schemes give returns which are as high as 15 per cent.
The EPFO has provided 8.75 per cent interest on PF deposits for 2013-14 and 2014-15. The rate of interest on PF deposits for the current fiscal is yet to be decided.
According to the agenda note of November 24 meeting, EPFO invested Rs 758 crore from Employees’ Pension Scheme and Rs 1,564.1 crore from Employees Provident Fund Scheme into ETFs.
Its investment stood at Rs 335.3 crore in August, Rs 1142.5 crore in September and 844.3 crore in October. It invested a total of Rs 588.01 crore in SENSEX and Rs 1,734.06 crore in NIFTY.