EPFO Invests Over Rs 2.5 Trillion in ETFs, Enhances Portfolio Diversification

EPFO Invests Over Rs 2.5 Trillion in ETFs, Enhances Portfolio Diversification

The Employees’ Provident Fund Organisation (EPFO) has surpassed Rs 2.5 trillion in its total investment in exchange-traded funds (ETFs) over a period of more than seven years, as informed by Minister of State in the Labour Ministry, Rameswar Teli, during the Lok Sabha session on Monday.

In response to a query regarding EPFO’s investments in debt instruments and ETFs, Minister Teli disclosed that Rs 27,105 crore had been invested in the current financial year up to October. Notably, the EPFO’s investment in ETFs for the fiscal year 2022-23 amounted to Rs 53,081 crore, surpassing the previous year’s figure of Rs 43,568 crore.

The historical breakdown of EPFO investments in ETFs includes Rs 14,983 crore in 2016-17, Rs 24,790 crore in 2017-18, Rs 27,974 crore in 2018-19, Rs 31,501 crore in 2019-20, and Rs 32,071 crore in 2020-21, according to the minister’s statement.

Addressing the mode of investment, Minister Teli clarified that the EPFO refrains from direct investments in individual stocks, including those of blue-chip companies. Instead, it channels its investments into equity markets through ETFs, mirroring the BSE-Sensex and Nifty-50 indices. Additionally, the EPFO has periodically invested in ETFs tailored for the disinvestment of the central government’s shareholding in various corporate entities.

According to earlier reports by Business Standard, the overall corpus of the EPFO’s investment has experienced a growth of 16.7 percent in the fiscal year 2023, reaching Rs 21.3 trillion compared to Rs 18.3 trillion in the preceding fiscal year 2021-22.

The EPFO initiated its foray into ETF investments in August 2015 by allocating 5 percent of its corpus to ETFs based on the S&P BSE Sensex and Nifty50. Over time, this limit was raised to 15 percent as part of the organization’s strategy to generate higher income from its investment portfolio.