Retirement fund body, Employee Provident Fund Organization (EPFO) likely to double the proportion of its investment in exchange traded funds (ETFs) this fiscal to 10%. The action will potentially escalate friction with trade unions.
A panel set up by the EPFO’s finance audit and investment committee (FAIC) has suggested doubling the proportion of its investment in ETFs to make it a meaningful contribution to the overall portfolio return of the EPFO.
The EPFO had so far invested 5% of investible deposits in ETFs despite opposition from labour unions. The amount invested by the EPFO in ETFs was Rs 7,468 crore as on June 30. The absolute return on the investment so far is 7.45%.
"The labour ministry will update us on the EPFO's investment in equity as well as place before us the report of the expert group. However, unions will continue to oppose any such investment," said DL Sachdev, who is also member of CBT, of All India Trade Union Congress (AITUC).
The expert panel has pointed out that at present the Employee Provident Fund Organisation's equity investment constitute less than 1% of the total corpus compared with the global average of about 30%.
Earlier, labour minister Bandaru Dattatreya had indicated that the proportion of EPFO's equity investment would be increased.