Out of the array of funds in the market, one which needs some looking is the CPSE ETF fund which is managed by Reliance Nippon Mutual Fund.

The Central Public Sector Enterprise (CPSE) Exchange Traded Fund (ETF) comprising equity shares of central public sector firms, has come out with a FFP (further fund offer) which is not so common among the mutual funds or ETFs.

The scheme was first launched in March 2014 and was offered to the public for subscription by way of a New Fund Offer (NFO). Subsequently units were listed on the stock exchanges in April 2014 in the form of an ETF tracking the Nifty CPSE Index.

ETF is primarily a mutual fund scheme which is listed and traded on a stock exchange. An ETF can invest in various types of financial instruments which replicate the movement of an index, commodity or a debt instrument.

As on Dec 30, 2016, the one year CAGR return of Nifty CPSE is 17.45 per cent as against 4.39 per cent given by Nifty 50, making it an attractive proposition, especially since in the past two years, the PSUs have shown a lot of vigour in terms of the functioning and financial performance, which has been aptly reflected in the ETF’s returns.

Nifty CPSE index has been constructed to facilitate Government of India to disinvest some of its stakes in select public sector enterprises through the ETF route.

The CPSE ETF comprises 10 blue-chip Maharatna and Navaratna stocks, such as ONGC, PFC, Coal India, REC, IOC, BEL, Gail (India), Oil India, Container Corporation of India and Engineers India.

“CPSE ETF FFO offers a compelling opportunity for investors, especially retail and retirement funds, to invest in the India growth story at an attractive valuation, lowest expense and embedded discounts,” says Sundeep Sikka, ED and CEO, Reliance Nippon Life Asset Management.

 

CPSE-ETF
Composition of CPSE ETF (as of December 31, 2016)
Company’s Name Weight (%)
Oil & Natural Gas Corporation Limited 24.35
Coal India Limited 20.54
Indian Oil Corporation Limited 17.96
GAIL (India) Limited 11.17
Power Finance Corporation Limited 5.58
Rural Electrification Corporation Limited 5.21
Container Corporation of India Limited 5.04
Bharat Electronics Limited 4.33
Oil India Limited 3.39
Engineers India Limited 2.26

Scheme Features

The FPO opens on January 18 and closes on January 20
Benchmark Index- Nifty CPSE Index
Pricing- 1/100th of Nifty CPSE Index
Fund Manager- Payal Wadhwa Kaipunjal
Minimum Application Amount- Minimum amount of Rs 5,000 and in multiples of Re 1 thereafter up to Rs 2,00,000
Plans- Growth
Listing- FFO units offered via the FFO listed on NSE and BSE on or before February 10, 2017
Maximum amount to be raised during FPO- Rs 6,000 crore
Discount offered- Discount of 5 per cent offered to retail investors.

 

(Source-Dalal Street Journal ,Indiainfoline)

 

 

 

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