EPFO users may get an option to increase or decrease investments in ETFs

Provident Fund
The subscribers to the Employees’ Provident Fund Organisation (EPFO) may soon get an option to increase or decrease investments in exchange-traded funds (ETFs).
The EPFO also approved a plan to create a reserve fund for its equity investments to shield the subscribers from stock market volatility.
Besides, the EPFO’s Central Board of Trustees (CBT), chaired by Labour and Employment Minister Santosh Kumar Gangwar, met on Friday and approved changes to the accounting policy of investment in equity.
The CBT also approved the recommendation of the financial investment and audit committee, the EPFO’s advisory body, which suggested that the subscribers are allocated equity units only for 15 percent of their contributions and all units over and above this allocation would be held by the EPFO, a statement issued by the EPFO said.
“A separate reserve fund for smoothening out the volatility of equity returns and to provide equitable returns to all the subscribers need to be created,” a statement issued by the EPFO said. EPFO Central Provident Fund Commissioner V P Joy said a committee had been formed to decide the modalities of creating a reserve fund for equity investments. The EPFO invests up to 15 percent of the subscribers’ incremental deposits in ETFs. The EPFO has been investing in ETFs since August 2015 and has invested around Rs 420 billion in the equity instrument so far, giving a return of 17 percent till February 28 this year.
Source: Business Standard

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