EPFO has decided to invest around Rs 410 crore in exchange trade funds (ETF) every month during the current fiscal, said the media reports.
"EPFO can invest around Rs 410 crore in ETF every month during this fiscal. The body has planned to invest 5 per cent of its incremental deposits every month," a senior EPFO official told PTI.
In the present scenario, the EPFO has received an average monthly incremental deposits of Rs 8,200 crore during this financial year so far. Thus, 5 per cent of incremental deposits comes to around Rs 410 crore.
The Employees' Provident Fund Organisation's (EPFO) apex decision making body the Central Board of Trustees' headed by the Labour Minister Bandaru Dattatreya had decided in March to start investments in stock market.
However, it was assured to the trustees in the meeting that being cautious about the volatile nature of stock market and with no prior experience of such investments, EPFO will start with investing in ETF during the current fiscal.
An ETF is a security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange.
Following the CBT decision, Labour Ministry had notified new investment pattern in April which provided that EPFO will invest a minimum of 5 per cent and up to 15 per cent of incremental deposits in equity or equity-related schemes.
However, EPFO has not invested in any ETF so far, the official said that SBI Mutual funds has be asked to handhold the body for its investments in the ETF and understand the dynamics of stock market.
The body has been primarily investing the central and state government securities which provide fixed returns and complete safety of investments. It manages a huge corpus of Rs 6.5 lakh crore with a subscribers base of six crore.