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EPFO subscribers to get option to hike investments in ETFs by this fiscal

Published: Jun 20, 2018

By TIOLCORPLAWS News Service

NEW DELHI, JUNE 20, 2018: Over five crore subscribers of retirement fund body EPFO would get an option to increase or decrease investments of their provident fund into stocks through exchange trade funds (ETF) in the current financial year.

The EPFO plans to credit ETF investments in the PF accounts of in about three months, thereafter it would give an option to the subscribers to hike or cut investments in ETFs from their funds.

EPFO's apex decision making body, Central Board of Trustees (CBT), had last week decided to explore the possibility of giving an option to subscribers for enhancing equity allocation beyond mandated equity investment limit (presently 15%) as also of reducing it below that limit. EPFO invests 15% of its investible deposits into the ETFs.

Earlier last year, the CBT had approved an accounting policy to credit ETFs into the members account apart from cash component. The CBT had also approved the recommendation of EPFO's advisory body — Finance Investment and Audit Committee (FIAC) — that subscribers be allocated equity units only for 15% of their contributions.

All units over and above this allocation to all the subscribers would be held by the EPFO. EPFO had started investing in ETFs in August 2015.

In 2015-16 it invested 5% of its investible deposits which was subsequently increased to 10% 2016-17 and 15% in 2017-18. It has invested Rs41,967.51 crore in ETFs with return of 17.23% as on 28 February 2018. The body had sold ETFs worth Rs 2,500 cr in March this year for the first time to liquidate its investments in stock market.

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