EPFO Update: Exchange-traded fund (ETF) redemption proceeds will all be reinvested by the Employees’ Provident Fund Organisation (EPFO) in the stock market. Talks over this have also begun with the Finance Ministry. Let us inform you that during its meeting in the final week of March, the Central Board of Trustees, the highest decision-making body of EPFO, gave its approval.
EPFO’s Strategies Amidst Market Volatility
The EPFO has reportedly proposed strategies to assist maximise equity returns despite market volatility, according to an Economic Times story. According to officials, the proposal also calls for computing ETF returns using the average Sensex returns over five years rather of the current four. EPFO will move forward with the process following the Ministry of Finance and Labor’s approval of this. Let us inform you that EPFO makes a variety of investments with the money deposited in PF account holders’ accounts. The owners of PF accounts receive interest on a portion of the profits from this investment. The subscribers will receive 8.15% interest on the money they put into their PF accounts for the fiscal year 2022–2023 on behalf of EPFO.
Flexibility within 15% Equity Allocation
Investment permitted up to 15%: In accordance with the Ministry of Finance’s regulations, EPFO is permitted to invest 5% to 15% of its income in equity and associated funds, among other things. However, EPFO is also requesting modifications to the rules governing ETF investments.
How much money was invested in ETFs: The government recently informed the House that during the months of April and July of the current fiscal year, EPFO invested Rs 13,017 crore in Exchange Traded Funds (ETFs). EPFO made ETF investments of Rs 53,081 billion in FY 2022–23, Rs 43,568 billion in FY 2021–22, and Rs 32,071 billion in FY 2020–21. During FY 2019–20 and FY 2018–19, respectively, EPFO invested Rs 27,974 crore and Rs 31,501 crore in ETFs.
