NEW DELHI: Government today sought to allay fears over investments by EPFO into ETFs, saying that their performance should be viewed over a long period of time and the retirement fund body has already got over 12 per cent return within a year, higher than G-Secs.
“If you are going to invest wisely in a pool of equity then surely there is not much of a risk. We cannot evaluate the performance of equity on the basis of one, two or three months. When we invest in equity, we invest for 20 or 30 years,” Labour Secretary Shankar Aggarwal said.
“As on July 31, 2016, we got a return of over 12 per cent (on equity) as compared to 8 or 7.5 per cent on G-Secs,” he said at an industry event here.
The Employees’ Provident Fund Organisation (EPFO) started investing in exchange traded funds (ETFs) in August last year and has invested Rs 7,465 crore till June 30, 2016.
Though the EPFO can invest up to 15 per cent of its investible deposits in equity or equity related scheme, the body had decided to park 5 per cent of its available funds in ETFs to start with.
On the potential risks of such investments, Aggarwal said: “This apprehension that when we invest in equity is a very risky business is far from way. Yes, there is a little bit of risk even when moving out of your home. There is a risk of meeting with some kind of accident.”
Labour Minister Bandaru Dattatreya has already indicated that investments in ETFs would be increased from existing 5 per cent and can go up to 12 per cent.
Yesterday, replying to a Calling Attention Motion of Ahmed Patel (Congress) in Rajya Sabha, Dattatreya said his paramount interest will be safeguarding the workers’ interest.
Patel’s motion was on the alleged diversion of money from EPFO to stock market.(Agencies)
Follow our WhatsApp channel