EPFO approves hike in investment limit in ETFs to 15%

The Employees' Provident Fund Organisation (EPFO) has approved hike in investment limit in exchange traded funds (ETFs) to 15%, from the existing 10%, Union Labour Minister Bandaru Dattatreya said on Saturday.

The decision was taken during the meeting of the Central Board of Trustees (CBT) in Pune on Saturday. 

"Seeing the rate of return during the meeting of the CBT, we have increased the investment into ETFs to 15%, from the existing 10%," said Dattatreya, who was in Pune to chair the CBT meeting.

He said the government in 2015 had taken a decision to invest in ETFs and 5% was invested then. In 2016, the investment was raised to 10%.

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"First year, we had invested Rs 6,577 crore and in the second year, the investment was Rs 14,982 crore. Now, the total investment as on April 2017 is Rs 22,858.69 crore. I am happy to inform you that the rate of return on our investment in ETF is 13.72%," said the minister while addressing the media.

He said Rs 234.86 crore have been earned as a dividend with this pattern of investment.

Asked how the EPFO will distribute the gains to its subscribers, Labour Secretary M Sathiyavathy said, "The money which is being invested is in the Sensex, the Nifty and central public sector ETFs. These are the three ETF where we are allowed to invest."

She added, "Now, we need to frame an exit policy. Once we get revenue out of it or an income, that will be deposited and the money will be given to the members."

This exit policy, the secretary said, was discussed on Saturday and the members sought some clarification. So, the EPFO intends to make one more presentation at the next CBT meeting.

"We had requested IIM Bangalore to do a study on this and give us the options. They have given us the options and we presented it before the members today," she said, adding that the members want some more time to examine them. "We will be bringing the exit policy at the next CBT meeting to take a final call." 

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