Too soon to increase equity investments, says EPF panel

'We need to examine the returns on equity investments for a few more months before taking a final call'

July 24, 2016 11:32 pm | Updated October 18, 2016 12:58 pm IST - NEW DELHI:

The Finance and Investment Panel of the Employees’ Provident Fund Organisation (EPFO) has cautioned the government on increasing investments in equity and has advised it to examine returns for a few more months.

“Some of the Central Board of Trustees (CBT) members have opposed investments in exchange-traded funds (ETFs),” said Prabhakar J. Banasure, a member of financial investment and audit committee of the EPFO which met on July 22.

“Looking at the market fluctuations at present, we have advised that we need to examine the returns on equity investments for a few more months before taking a final call.”

CBT meeting

He, however, said that Labour Minister Bandaru Dattatreya, who has called a special CBT meeting to discuss equity investments related proposal on Tuesday, will take a final call on the matter.

The EPFO started investing five per cent of its corpus in equities beginning August last year. It can invest up to 15 per cent in equity and its related instruments such as exchange-traded funds. Till June 30, EPFO has invested Rs.7,468 crore in ETFs, earning an absolute return of 7.45 per cent so far, Mr. Dattatreya said in a written reply in Lok Sabha last week.

ETF investment

Mr. Dattatreya wants an increase in equity investments and in the last Central Board of Trustees meeting, held earlier this month he had sent a status report on returns on equity investments to the Finance, Investment and Audit Committee.

“The world over, the investments in exchange traded funds are going up. The investment in exchange traded funds will benefit in the longer run and lead to an increase in the rate of return we offer to our subscribers. Soon, we will take a decision on how much the equity investments should be increased,” Mr. Dattatreya had said.

The Labour Ministry said that the yields on investment in equity till date were equal to return on government securities investment.

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.