What is CPSE ETF?
CPSE is stands for Central Public Sector Enterprises. CPSE ETF is exchange traded index
fund. It consist from 10 PSU companies stocks. CPSE index consist from
Maharatnas, Navratnas and Miniratnas. These 10 constituents are ONGC(26.72%),
GAIL(18.48%), Coal India(17.75%), REC Ltd(7.16%), Oil India Ltd(7.04%), Indian
Oil Corporation(6.82%), PFC Ltd(6.49%), Container Corporation(6.40%), Bharat
Electronics(2.0%) and Engineers India Ltd(1.13%). It is a part of government’s
disinvestment program.
This idea
has begun before 2 years back and now government has come with this CPSE ETF.
The government has selected the Goldman Sachs Mutual Fund to manage CPSE ETF.
Goldman has run gold ETF successfully which is listed in the name GOLDBEES in
both NSE and BSE. The issue is open from 19th March, 2014 to 21st
March, 2014.
Why invest?
It is
clear that government want to sell stake in PSUs more as its proposed
disinvestment program and want to reduce its fiscal deficit through it but
before investing in this ETF NFO investors should consider all aspect of this
issue.
It offers
5% upfront discount on reference market price. If investors hold it till one
year, they will get 1 loyalty unit for each 15 units hold. These 10 companies
are among the best companies from all available PSUs. These companies are
available in very cheap rate now so current valuation also is attractive to
purchase it. The expected dividends are also a main reason to purchase it.
Why not invest?
It is not
good for short term investor as it is equity fund. So equity related risk is
always there. It is new type of product which is not related any particular
sector or theme. It seems that this ETF represent too many power and energy
sector companies. Although the valuation is attractive at the current time but
keep in mind the fact these PSU companies run by not competent promoter. Before
invest in this ETF evaluate all possible pro and cons.
For more detail and any other query
related investment, you can contact me through my email.
Warm regards,
Arvind Trivedi
Certified
Financial Planner
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