EPFO to increase portion of Equity Investment to 10%


New Delhi: On Tuesday according to experts recommendation, retirement fund body EPFO is probable to increase the proportion of its investment in exchange traded funds (ETFs) for this economic to 10 per cent at its trustees meet in line with an expert panel's recommendations. EFPO, at current, is spending 5 per cent of investible put in ETFs regardless of opposition by labour unions. Sources have conveyed that, the Employees' Provident Fund Organization (EPFO) is most probable to increase the percentage of its speculation in ETFs to 10 per cent as suggested by specialist’s panel in its trustees meeting on July 26. The panel comprises by EPFO's Finance Audit and Investment Committee (FAIC) has suggested the allocation to equity can be made 10 per cent this economic. It was of the view that present share of 5 per cent increase flows to equity may not be enough for significant repentance to overall portfolio return of the EPFO.

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The panel tip out that at current the EPFO's equity investment constitutes less than 1 per cent of the total corpus compared with the worldwide average of about 30 per cent. The specialists recommended that if the body will invest 5 per cent of its investible deposits in equity every year then it will take 15 years for these investments to become 5 per cent of the EPFO's total investment. They also conveyed that if 10 per cent is invested into equities then it will take now five years for these investments to turn out to be 5 per cent of the whole portfolio. On Tuesday the account of the group to examine substitute strategy for investments in ETFs will be placed previous to the EPFO trustees. Previous, Labour Minister Bandaru Dattatreya had indicated that the amount of EPFO's equity investment will be augmented. The ministry had also informed a prototype of investment on April 23, 2015, which allows investment in equity and connected investments from 5 to 15 per cent. The EPFO is predictable to have Rs 1.35 lakh crore as investible deposits in the present economic. Though, the EPFO's apex decision making body the Central Board of Trustees headed by the Labour Minister had decided to spend only 5 per cent in ETFs to commence with previous year. On June 30 total amount spended by EPFO in ETFs is Rs 7,468 crore. The total return on the investment so far is 7.45 per cent.

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