5 per cent of PF in Exchange Traded Funds (ETF)

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New Delhi: The government has allowed the Employees’ Provident Fund Organisation (EPFO) to invest 5 per cent of its corpus in exchange traded funds (ETFs) which will result into an inflow of around Rs 5,000 crore into the stock markets during this fiscal year.

The Labour Ministry has notified the new investment pattern for EPFO which allows the retirement fund body to invest 5 per cent of its funds into ETFs.

Shankar Aggarwal,labour secretary told reporters, “We will invest 5 per cent of the investible funds of EPFO into the ETF. The new investment pattern has been notified about two-three days ago.” As per estimates, EPFO’s incremental deposits for 2014-15 would be around Rs 80,000 crore. Moreover, during the current fiscal year, the incremental deposits could be around Rs 1 lakh crore as the body had increased the monthly wage ceiling for coverage under its social security schemes to Rs 15,000 from Rs 6,500 in September last year.

Explaining further, Mr Aggarwal said, “We will begin by one per cent and go up to five per cent by the end of this financial year. They (EPFO) have to reach the figure of 5 per cent by the end of this financial year.”

“The Finance Ministry had advised us to invest 5-15 per cent of corpus in equity market. We are entering into the equity market for the first time, therefore, we are a little cautious… It is hard earned money of the employees. We cannot take that kind of risk (investing 15 per cent of corpus in equity). By end of this fiscal year we will touch a figure of 5 per cent.”

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