Employees’ Provident Fund Organisation invests Rs 9,723 crore in ETF's, attracts 9.17 per cent returns

Employees’ Provident Fund Organisation (EPFO) has invested a staggering amount of Rs 9,723 crore in exchange traded funds as on October 31 this year and the absolute returns till that time has been 9.17 per cent, the government told the Lok Sabha on Monday.

“The total corpus of EPFO was Rs 7.49 lakh crore as on March 31, 2016. The total amount invested by EPFO in ETFs is Rs 9,723 crore as on October 31, 2016 and the absolute return was 9.17 per cent as on October 31, 2016,” Labour and Employment Minister Bandaru Dattatreya said replying to questions.

He also said EPFO’s investment in exchange traded funds (ETFs) would be increased to 10 per cent from the current level of 5 per cent within the scope of investment pattern notified by the Finance Ministry. As a precautionary measure, EPFO is investing only in Nifty and Sensex ETFs, he added.

“The returns from investment made in ETF are generally more than the returns from other investments. Therefore, the subscribers are benefitted due to higher returns,” he said.

Further, Dattatreya said the dividend yield becomes part  of the net asset value of the ETF and would, therefore, be added to the account of EPF of the employees wherever applicable.

When asked whether EPFO’s decision to invest in capital market was vehemently opposed by various stakeholders, the Minister said, “employees’ representatives of the Central Board of Trustees (CBT) opposed the move to invest in capital market”.