EPFO Announces Major Overhaul in Investment Strategy

Significant Changes in EPFO's Investment Approach

EPFO Update: The Employees' Provident Fund Organization is set to implement a significant transformation in its investment strategy. Presently, the EPFO allocates funds from five distinct schemes into exchange-traded funds (ETFs) on a monthly basis. However, this process is about to change. The EPFO will consolidate the funds from these five schemes into a single account, transitioning to an annual investment in ETFs instead of the current monthly schedule. This shift aims to streamline the investment process and reduce the associated paperwork.

Future Plans of EPFO
The EPFO's current practice involves monthly investments in ETFs from separate accounts for each of its five schemes. With the new plan, these funds will be pooled into one account, allowing for a single annual investment in ETFs. This adjustment is expected to simplify the investment process and minimize paperwork. Additionally, the EPFO will engage in the fourth buyback of non-convertible debentures (NCDs) from the Delhi-Meerut Expressway Development Company (DMEDL), which is offering to repurchase each bond at ₹103,468, up from the original ₹100,000. These initiatives have received approval from the EPFO's Investment Committee and will be discussed at the upcoming Central Board of Trustees (CBT) meeting on March 2.

The proposals have already been sanctioned by the EPFO's Investment Committee and are set for final approval during the CBT meeting on March 2. However, the agenda for this meeting does not include any updates regarding the interest rate for the fiscal year 2025-26. According to reports, the meeting will also focus on developing a new Standard Operating Procedure (SOP) to tackle existing challenges related to ETF investments.

At present, the EPFO operates under the previous SOP established in 2016, which mandates separate investments for each scheme without combining them. The organization now aims to revise this strategy to mitigate risks associated with market volatility. The current ETF investment cycle spans from the 20th of each month to the 19th of the following month; however, with the introduction of annual SIPs, this monthly cycle will become obsolete.

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