Employees Provident Fund Organization i.e. EPFO is soon going to change its way of investing. As everyone knows that EPFO invests the additional part of its earnings in ETFs. This process is adopted every month. This investment is made from different accounts under the five schemes of EPFO. But this will not be seen in the coming days. Now EPFO will put the funds of all its five schemes in one account and invest together and once a year. On the other hand, EPFO is also going to participate in the buyback offer of non-convertible debentures of Delhi-Meerut Expressway Development. Let us also tell you what kind of planning EPFO is working on.
What is EPFO planning?
Employees’ Provident Fund Organization (EPFO) is planning to pool the funds of all its five schemes in a single account to invest in ETFs. It is also planning to shift from the current monthly investment cycle to annual investment. With this step, the regulatory and operational procedures related to ETF investment by EPFO will become much easier. On the other hand, the retirement fund body will participate in the fourth round of buyback offered by Delhi-Meerut Expressway Development (DMEDL) to sell its non-convertible debentures (NCDs) at an offer price of Rs 1,03,468 for each bond with face value of Rs 1,00,000.
New method of investment will be implemented
These proposals approved by the Investment Committee will be placed for consideration and approval in the meeting of the Central Board of Trustees of EPFO to be held on March 2. However, the estimated announcement of interest rates to be offered by EPFO for 2025-26 has not been included in the agenda issued by the retirement fund body. As per the agenda of the Central Board of Trustees, EPFO will prepare a new Standard Operating Procedure (SOP) for investing in ETFs to deal with the existing challenges, reports ET. EPFO has been investing 5-15 percent of its increased income in ETFs since 2015. The agenda states that EPFO will introduce a uniform, consolidated system for ETF investment in all EPFO schemes. According to the report of ET, it has been said in the agenda that this will help EPFO to fulfill the order of the stock market regulator in which there is a rule to do only direct transactions of more than Rs 25 crore with providers.
Investment will happen not every month but once a year
Under the current SOP which is in force since 2016, EPFO adopts the method of investment as per the scheme without consolidation. In the future, it plans to switch to annuity investments, a move that is expected to reduce market timing risks. Additionally, the annual SIP (Systematic Investment Plan) calculation for investment in ETFs will render redundant the existing monthly cycle of 20th to 19th (mentioned above), the agenda said. EPFO also proposes to implement clearly defined timelines to ensure market participation at all times, including timely issuance of deal slips and ETF redemptions, which is different from the current practice of having no fixed timelines.