This Article is From Apr 08, 2015

Disinvestment Department Wants PF Body to Invest in Public Sector Stocks ETF

Disinvestment Department Wants PF Body to Invest in Public Sector Stocks ETF

New Delhi: The Department of Disinvestment has initiated talks with the Labour Ministry to persuade retirement fund body Employees' Provident Fund Organisation (EPFO) to invest a portion of its funds in the exchange traded fund of PSU stocks.

"I spoke to the Labour Secretary. We are taking up with the EPFO. We have to write formally to them so that they invest in CPSE ETF. I think they will be agreeable to invest in CPSE ETF," Disinvestment Secretary Aradhana Johri said here.

The CPSE Exchange Traded Fund (ETF) was set up in 2014. The basket consists of shares of 10 PSUs and provides an opportunity for investors to become part-owners of Oil & Natural Gas Corp, GAIL India, Coal India, Indian Oil, Oil India, Power Finance Corp, Rural Electrification Corp, Container Corp, Engineers India and Bharat Electronics.

An ETF is a security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange.

When asked whether the disinvestment department also wants EPFO to participate in PSU disinvestment, she said, "I don't think they would be agreeable to it now."

Recently, the Labour Ministry proposed to start with investment of 1 per cent of EPFO corpus into equity and related schemes and take it gradually to 5 per cent.

EPFO has corpus of about Rs 6.5 lakh crore with average annual deposit of Rs 80,000 crore.

Finance Minister Arun Jaitley in the Budget proposed a new investment pattern under which EPFO would invest a minimum of 5 per cent of its investable funds into equity and equity related schemes.

ETFs were introduced in India in 2001. At present, there are about 33 ETFs with assets under management of close to Rs.11,500 crore held by 6.2 lakh investors. Gold ETFs dominate the market in India.