Free Trading + Demat Account

CPSE ETF Review - Why you should consider investing in this Mutual Fund?

Posted on Friday, January 6, 2017

CPSE ETF Review - Why you should consider investing in this Mutual Fund?

CPSE ETF a preferred option for investment

The first Central Public Sector Enterprises - Exchange Traded Fund (CPSE ETF) scheme was launched by Goldman Sachs MF and had a maiden offer in March 2014 that marked overwhelming response. Although this scheme is a MF scheme, it differs from conventional MF schemes as CPSE ETF provides better liquidity, low cost transactions, better yield and a bouquet of safe PSUs.

According to a study report from a leading financial institution, CPSE has given CAGR of over 17 per cent (for retail category) since inception and has outperformed Nifty on any short to long term parameters. CPSE ETF has a special CPSE Nifty index that was formed on 1st January 2009 with a base value of 1000. First CPSE ETF scheme comprised of 10 selected PSUs (Maharatna and Navratnas) and were selected on investor friendly criteria. List included ONGC, Coal India, Oil India, IOC, Gail, Container Corp., Bharat Electronics, Engineers India, Power Finance and Rural Electrification. It also had a loyalty addition as well as bonus contents. These companies had different ratio of weightings in the CPSE Nifty. Selections of these companies were done on following characteristics:

  • Having more than 55% government holding (stake via Govt. of India or President of India) under promoter category and
  • Having average free float market capitalization of more than Rs.1,000 crore for six month period ending June 2013
  • Having paid dividend of not less than 4% including bonus for 7 yrs immediately preceding or for at least seven out of the eight or nine years immediately preceding, are considered as eligible companies as on cut-off date i.e. 28-Jun-2013.

A report by Trust Investment Advisors has also done a comparison of ETF with other investment alternates. The table is given below for investors’ reference.

Comparison of ETF with other Equity Linked Instruments

Parameter

Stock

Index Funds

Equity MF

ETF

Safety

Low to Medium

High

Medium

High

Liquidity

Low to Medium

High

High

High

Return

Wide Range – Low to High

Medium

Wide Range – Low to High

Medium

Transaction Cost

Low

Medium

High

Low

First CPSE ETF offer was for Rs. 3000 crore. Now for the second CPSE ETF Reliance Mutual Fund has got the nod and is likely to generate Rs. 5000 crore for exchequer.

According to sources, Group of Ministers are likely to meet on Monday (09.01.2017) to consider the norms for the second CPSE ETF issue that will include loyalty as well as bonus contents and this time, EPFO like funds will be allowed to park 15% against 5% limit announced earlier.

As the asset class has strong fundamentals, CPSE ETF has outperformed and hence the second offer will provide a better option of investment for retail investors and pension funds. Issue is expected by the end of this month ahead of budget.

Rate this article
22
3.5
Rating:Rated 3.5 stars

Vote Here ...

About Author

No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well informed investors to participate is such offers. With crazy recent listings, SME IPOs have started drawing attention of investors across the board. However, as SME issues have entry barriers and continued low preference from broking community, any reader taking decisions based on any information published here does so entirely at own risk. Above information is based on information available as on date coupled with market perceptions. Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda (SEBI registered Research Analyst-Mumbai), a freelance journalist for more than 25 years, is a stock market analyst and news article writer. Since 1985, he has contributed to print media, electronic media and often appears on TV channels as visiting stock analyst. His articles are regularly publishes in Smart Investment (English and Gujarati weekly published from Ahmedabad), Free Press Journal and many other news papers & magazines. He is also a visiting stock analyst on DD News TV Channel.

Email: dilip_davda@rediffmail.com


User Comment

avatar
5. Mr. relianble  Jan 30, 2017 1:30:17 PM IST Reply
cpse allocation prices is Rs. 25.2141 .....................
avatar
4. shridhar  Jan 22, 2017 10:47:54 AM IST Reply
What is the final rate for allotmen? ??
avatar
3. Vikas Golchha  Jan 19, 2017 8:11:22 AM IST Reply
What date will be considered for reference price for the CPSE ETF issue?? No article answers this. Will it be the allotment date or issue opening date or issue closing date??
avatar
3.1. parmod gupta  Jan 20, 2017 6:04:41 AM IST
Answer of some question regarding CPSC FFO 2


This is a extention of first tranche

First Tranches was 3000 Cr in thia Anchor investor - FII - Corporate - Institution all participate

But In this CPSC 2 fund size is 6000 cr out of 1800 Cr for Anchor investor which start on 17 Jan

And 4200 Cr for Retail investor which start on 18 to 20 Jan 2017

First chance for Retail if not fully subscribe than for others like pension fund - Retirement fund and corporates etc

Allotment on proportionate base

No first come first serve base or No lottery system

Each and every retail investor will get allotment.

Allotment on Average price of 18 19 20 jan NAV for example CPSC ETF on

18 Jan 26
19 jan 26.50
20 jan 27

Than allotment on average of 3 days means @ 26.50

For Anchor investor 1 month lock in period

Foe Retail investor there is no lock in period

Floating is very high in this bcoz when come in 2014 that time pension fund and Retirement fund were not allowed to invest in ETF but Now Govt allow to them to invest 5 % in ETF so demand will be very high bcoz they buy for 5 years and 10 years veiw and this ETF have highest Dividend yeild and almost 15 % CAGR return so on listing Retailer can easily sold with full liquidity.


5 % Discount for Retail

Earlier it was name on goldman sach But goldman mutual fund take over by Reliance mutual fund so its call Reliance CPSC ETF FFO

All PSU basket companies in this CPSC are giving Dividend continue last 10 years.

Documents are required for this CPSC ETF

1.Cheque ( No third party allowed)

2.client master list or Demat holding statement (No original required)

3.Pan card xerox

4.KYC form
avatar
2. SJ  Jan 13, 2017 9:32:02 PM IST Reply
I have 2 questions.
1) If one has planned total 10 L to invest in equities throught year 2017, how much of it should one invest in this CPSE ETF?
2) If the underlying stocks in this ETF declare devidends/split/bonus etc, is the ETF holders eligible for getting devidents/bonus or respectively ETF value gets increased/changed?
avatar
1. HSquare  Jan 13, 2017 2:26:30 PM IST Reply
Would you please guide regarding how to apply in this ETF, Online or offline?
special_offers
By Popular Stock Brokers

Intraday @ 0.02%
Delivery @ 0.15%

Rs 0 account opening fee
(Rs 400 waived)


Request Demo

Flat Rs 20 Per Trade
Free Equity Delivery Trades

Rs 100 off on account opening* + 100% brokerage refund if in 60 days you have made net profits

Enquire Now
(* on online account opening)

ProStocks Reivew
ProStocks
Flat Fee Broker

Rs 899 Unlimited Equity
Rs 499 Unlimited Curr
or Rs 15 per Trade

Lowest Transaction Charge
Lowest Call & Trade Fee
Lowest Stamp Duty

FREE Trading + Demat Acct

Beginner, seasoned investor, active trader or HNI. Get customised solutions.

Rs 0 account opening fee on Online Trading + Demat Acct
(Rs 1150 waived)

Request Call Back

RKSV Discount Broker Review  RKSV

Ditch & Switch

Switch to RKSV and earn brokerage credit of Rs 2000

Get RKSV Trading Account



More About Brokers

Special Offers Broker Reports

Message Board

Stock Message Board


Search Chittorgarh.com:

Translate Chittorgarh.com: