In a bid to boost returns, EPFO engages with Finance Ministry to reinvest ETF funds in equities
Employees Provident Fund Organisation (EPFO) is in talks with the Finance Ministry to find out the possibility of reinvesting its money in the stock market from exchange-traded funds (ETFs), reported Economic Times in its report. According to the report, EPFO is also mulling over to implement a strategy to optimise equity returns while shielding gains from market volatility.
The move is followed by the approval of EPFO's apex decision-making body, Central Board Trustees (CBT), at its meeting in March. It approved the retirement fund body to reinvest its redemption proceeds from ETF investment.
Other than the permission for investment in stock market, approval for daily redemption of investment is also on the cards. EPFO will also strive to fix return at 100 bps higher than prevailing government securities yield.
This will help EPFO in maximising returns and reduce volatility. As per the current guidelines on EPFO investment, it can invest between 5% to 15% of its income in equities and related investments.
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