EPFO to sell part ETF holdings, may fetch Rs 2,700 crore gain

The investment is likely to bring a gain of Rs 2,700 crore or 45% at current prices.

The Employees’ Provident Fund of India (EPFO) will soon go ahead with its plan to sell part of its investments worth Rs 6,000 crore in exchange-traded fund (ETF), in a move that may fetch the retirement fund body an income of Rs 2,700 crore. “In its meeting on March 5, the Central Board of Trustees (CBT) gave approval for selling our investments made in the calendar year 2016 worth Rs 6,000 crore. The CBT had also given us the permission to sell the investment at an appropriate time. We will now be going ahead with the plan after informing the CBT in the next meeting scheduled on September 9,” an EPFO official said.

The investment is likely to bring a gain of Rs 2,700 crore or 45% at current prices. However, the official said that the sale has nothing to do with the interest rate on EPF deposits annouced for 2019-20, which have been proposed to be fixed at 8.5%, though the mandatory ratification from the finance ministry is still pending.

EPFO has been investing in the stock market through ETF since 2015. As per the current investment pattern, EPFO invests 15% of its annual incremental receipts in equity; the rest in debt. EPFO invests in ETFs based on Nifty 50, Sensex, Central Public Sector Enterprises (CPSEs) and Bharat 22 Indices. EPFO does not invest in shares and equities of individual companies. The total amount invested by EPFO in ETFs, as on September, 2019, is Rs 86,966 crore.