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Finance Audit Committee Proposes 10% Limit On Booking Via Exchange Traded Funds

By: Business Desk

Local News Desk

Last Updated: January 19, 2023, 12:49 IST

Delhi, India

In ETFs, EPFO invests 15% of its total fund. Additionally, EPFO intends to extend the ETF investment window from four to five years.

In ETFs, EPFO invests 15% of its total fund. Additionally, EPFO intends to extend the ETF investment window from four to five years.

An EPFO board member, on the condition of anonymity, said that this would increase returns and add transparency to the redeemed policies.

The Finance Investment and Audit Committee has proposed to set a limit of 10% return for profit booking in equity investment made through Exchange Traded Funds (ETF). Furthermore, it suggested redeeming the ETF instead of withdrawing the money invested in a lump sum. This interprets that only if the annual return is 10% or more would EPFO redeem the ETF. Once it has been authorised by EPFO’s Central Board of Trustees (CBT), it will be put into effect.

An EPFO board member, on the condition of anonymity, said that this would increase returns and add transparency to the redeemed policies. Compared to debt and other investing options, equity generates higher returns. In light of this, EPFO is currently altering its investment approach. The labour ministry will also support more equity in the investment.

In ETFs, EPFO invests 15% of its total fund. Additionally, EPFO intends to extend the ETF investment window from four to five years. According to a representative, EPFO intends to profit from the ups and downs of the stock market. Due to this, daily redemptions of ETF investments are required rather than one large redemption with a 10% return or higher.

Currently, EPFO uses the ‘first in, first out’ principle while redeeming stock. For a better return, the money invested in the first year is withdrawn in the fourth year. According to the Ministry of Labour, equity investments are now required to provide EPFO members with greater returns. The development comes against the backdrop of declining rates of return in investment opportunities and debt

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On the other hand, the Employees’ Provident Fund Organisation (EPFO) has been notified to start some online services for customers. Pensioners don’t need to visit any physical branch to avail of those services now. Below mentioned are the services present online:

Online submission of pension claims (through EPFO member portal/ UMANG app).

Online viewing of pension passbook.

Downloading of pension payment order (PPO) from Digi-locker.

Submission of digital life certificate from home through the mobile app.

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first published:January 19, 2023, 12:49 IST
last updated:January 19, 2023, 12:49 IST
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