The Employees' Provident Fund Organisation (EPFO) is set to consolidate its five schemes into a single account for ETF investments, moving from monthly to annual investment cycles. This aims to simplify regulatory and operational procedures. The r...
New Delhi: The Employees' Provident Fund Organisation (EPFO) plans to consolidate funds of all its five schemes into a single account to invest in exchange traded funds (ETFs) and move to annual investment from the current monthly investment cycle, a move aimed at significantly simplifying regulatory and operational procedures related to ETF investments by the retirement fund body.
Further, it is expected to participate in the fourth round of buyback offered by the Delhi-Meerut Expressway Development (DMEDL) to offload the latter's non-convertible debentures (NCDs) at the offer price of ₹ 1,03,468 per bond with a face value of ₹1,00,000.
The proposals, approved by its investment committee, will be put up for consideration and approval by the central board of trustees of the EPFO when they meet on March 2. However, the anticipated declaration of the interest rate to be offered by the EPFO for 2025-26 has not been included in the agenda circulated by the retirement fund body.
As per the agenda circulated by the EPFO for consideration at the 239th meeting of its central board of trustees, the EPFO will firm up a new standard operating procedure (SOP) for investment in ETFs to address the current challenges. The EPFO has been investing 5-15% of its incremental income in ETFs since 2015. "EPFO will introduce a uniform, consolidated mechanism for ETF investment across all EPFO schemes," it said in the agenda, a copy of which was seen by ET. This will help the EPFO address the stock market regulator's mandate of direct transaction with providers only above the threshold of Rs 25 crore, the EPFO said.
Under the existing SOP, which has been in place since 2016, the EPFO follows a scheme-wise investment approach without consolidation.
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In the future, it plans to switch to annual investments, a move expected to mitigate the market timing risk.
"Further, calculation of annual SIP (systematic investment plan) for investment in an ETF would make the current monthly cycle of 20th to 19th (mentioned above) redundant," said the agenda.
The EPFO also proposes to put in place clearly defined timelines to ensure market participation at all times, including timely issue of deal slips and ETF redemption, in a change from the current practice of having no specified timelines in place.
