CLARIFICATION ON INVESTMENT IN UNITS OF EXCHANGE TRADED FUNDS OUT OF PROVIDENT FUND OR ANY OTHER EETF OUT OF PROVIDENT OR OTHER EMPLOYEE CONTRIBUTORY RETIREMENT FUND
SECP vide Circular No. SCD/Circular/17/2021 dated June 11, 2021 has clarified that a Company can invest out of provident fund or any other employee contributory retirement fund in Exchange Traded Funds (ETF’s) being the open-end collective investment scheme registered as notified entities with the Commission.
However, aggregate investment limits, sub-investment limits and the conditions for investment as provided in the Employees Contributory Funds (Investment in Listed Securities) Regulations, 2018, as explained below shall be ensured.
Limits for investment in Listed Securities
(As provided in the Employee Contributory Funds (Investment in Listed Securities) Regulations, 2018)
|Regulation Reference||Description||Maximum limit *|
|3(1)(a)||Total investment in Debt CISs including Debt ETF||50%|
|3(1)(c)||Total investment in Equity CIS including Debt ETF||30%|
|3(8)||Total investment in debt CIS including Debt ETF managed by a single asset management company||50% of 3(1)(a)|
|3(9)||Total Investment in any single equity CIS including equity ETF||30% of 3(1)(c)|
* As a percentage of the size of the Fund or trust, as the case may be at the time of making investment.
Conditions for investment in Listed Securities
|4(c)||Investment in debt CIS including Debt ETF which have been assigned||“A” stability rating|
|4(f)||Total Investment in hybrid CIS including hybrid ETF||3 (1) (c)|
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