The Employees Provident Fund Organisation (EPFO) has asked Indian Institute of Management (IIM) Ahmedabad to study and give a report on disbursement of dividends it gets from investments in ETFs, Union minister Bandaru Battatreya has said. The EPFO has cumulatively invested Rs 21,559 crore in the two index-linked ETFs (Exchange Traded Funds) — the BSE’s Sensex and the NSE’s Nifty, in 2015-16 and 2016-17 and has plans to invest about Rs 22,000 crore during the current financial year, the Minister of State for Labour and Employment (independent charge) said.
According to him, the investments yielded 13.72 per cent return on investment (ROI) at Rs 2,957 crore and earned dividend or bonus of Rs 272 crore. “We are getting good returns on the ETF investments. We are getting bonus also (Rs 272 crore) on the investments. We want to credit this amount to all our four crore subscribers,” Dattatreya said. “We have asked IIM Ahmedabad to study and give us report on how to disburse the bonus. Once they give the report, the same will be placed in the next meeting of Central Board of Trustees,” the minister told PTI.
The members are usually paid interest from the returns on the traditional investments that the EPFO normally makes. IIM-A is expected to specify a mechanism under which the proceeds out of ETF will be disbursed, he said. The finance ministry had in 2015 notified a new investment pattern for EPFO, allowing the body to invest a minimum of 5 per cent and up to 15 per cent of its funds in equity or equity-related schemes.
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The EPFO had started investing up to 5 per cent of its investable amounts in ETFs in August 2015. The organisation’s investable deposits (annual) are around Rs 1.50 lakh crore and it manages a corpus of about Rs 8 lakh crore. Investable income is the net income of the EPFO from the investments it makes in various forms and fresh contributions, among others, a senior official said. Dattatreya said despite tapering interest rates outside, EPFO continues to give good returns to its subscribers. Last year it offered 8.65 per cent interest on members’ deposits.