Published on Friday, January 13, 2017 by Dilip Davda | Modified on Thursday, May 2, 2019


It was March 2014, when the first novel mutual fund scheme called CPSE-ETF (Central Public Sector Enterprise – Exchange Traded Fund) was introduced by Golaman Sachs for bundle of 10 Maharatna and Navratna PSUs. This initial NFO (New Fund Offer) was for Rs. 3000 crore and was oversubscribed to the tune of Rs. 4363 crore and the excess amount of Rs. 1363 crore was refunded to investors. This maiden offer has given good returns with a CAGR of above 14 per cent since inception.

Reliance Mutual Fund CPSE ETF gets an overwhelming response as the issue gets oversubscribed by wide margin.

As the Goldman Sachs AMC was taken over by Reliance Nippon Life Asset Management Company, the second such offer as CPSE ETF FFO (Further Fund Offer) is coming to market from Reliance Mutual Fund. This offer is set to mobilize Rs. 6000 crore (base size is Rs. 4500 crore and green shoe option for Rs. 1500 crore). Out of the total offer, 30 per cent is reserved for Anchor Investors, for whom the offer is open for a day i.e. on 17.01.17 and for other categories, the offer opens on 18.01.17 and will close on 20.01.17. Out of the residual portion, 70 per cent is kept for retail investors (i.e. application up to Rs. 2 lakh) on firm allotment basis and the second preference would be given to EPFO and PFs and the rest will be for HNIs and QIBs, as informed by the management.

The composition of CPSE ETF as on 31.12.16 was as ONGC (24.35%), Coal India (20.54%), IOC (17.96%), GAIL (11.17%), PFC (5.58%), REC (5.21%), Container Corp (5.04%), BEL (4.33%), Oil India (3.39%) and Engineers India (2.26%). While NFO had a loyalty bonus linked to it, this time, FFO has upfront discount of 5 per cent across the category and firm allotment for retail investors. CPSE ETF has an expense ratio of 6.5 bps, which is much lower than the other non-ETF that has an expense as high as up to 200 bps.

As this novel instrument garnered good response for maiden offer, it is expected that this time too it will have better acceptance despite all odds as it has a proven track record and pack of highly liquid and most prestigious, monopolistic and sector leader PSUs in it. This FFO is part of the Government of India's overall disinvestment program, announced earlier by the Department of Investment and Public Asset Management (DIPAM), Ministry of Finance, using the ETF route. The further fund offer in the CPSE ETF is part of the government's larger disinvestment programme that was announced earlier by the Ministry of Finance. Issuer feel confident that the timing of the issue will help investors benefit from their exposure in a diversified basket like CPSE ETF that includes a list of distinguished PSUs that have performed exceedingly well in their respective sectors.

Important Notes: As this is a Mutual Fund scheme, it attracts KYC norms. As per market experts, Demat KYC is valid while Bank KYC will not be accepted. Application it so be given with cheques (i.e. no ASBA). No third party cheques will be entertained. PAN Card copy as well as demat client master to be attached along with application is must. If application is made in the name of minors, copy of birth certificate is mandatory.

Conclusion: Considering track record of the first CPSE ETF, this FFO is considered as a safe investment option for medium to long term.

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About Author

DISCLAIMER: 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. Any reader taking decisions based on any information published here does so entirely at own risk. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. Above information is based on RHP and other documents available as of date coupled with market perception. Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).

About Dilip Davda

Dilip Davda, a freelance journalist

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com


15. DSR   I Like It. |Report Abuse|  Link|Mar 10, 2017 7:21:47 PMReply
Any expert views on CPSE ETF FFO? Is the process of allotment same as IPO?
What''s the outlook of this fund in 1 year span?
14. sandeep   I Like It. |Report Abuse|  Link|Mar 10, 2017 6:25:18 PMReply
Dear admin Sir ,

Any update for 14th March ?
Again launching another tranche of 2500 cr. or its rumour on IPO pages ?
reliance mutual fund website not showing anything.

Thank You Sir
14.1. BullChunk   I Like It. |Report Abuse|  Link|Mar 11, 2017 11:08:32 AM
Its not Rumour.
It will open from 15th March to 18th March with 3.5 % Discount.

Check the link for more information
14.2. sandeep   I Like It. |Report Abuse|  Link|Mar 11, 2017 3:30:45 PM
Thank You dear
13. Gauravbshah   I Like It. |Report Abuse|  Link|Jan 30, 2017 11:12:12 PMReply
May I sell tomorrow...as the same isin

12. Manoj   I Like It. |Report Abuse|  Link|Jan 30, 2017 10:02:30 PMReply
Received 3966 reliance CPSE ETF- app 1 lac
11. SRAOK   I Like It. |Report Abuse|  Link|Jan 30, 2017 7:56:41 PMReply
I received a message saying credit of 7932-REL ETF FD-GR in to my CDSL account for 2L application
10. RAJA RAJASTHANI   I Like It. |Report Abuse|  Link|Jan 29, 2017 11:04:03 PMReply
CPSE ETF FFO series 2

Amount of 2/2 of 2L still not debited from bank account.

customer_care@reliancemutual.com replied that they are unable to trace the application.

email of registrar is not available in brochure.

Where to complaint the grievances.

Expert please comment..

Any help welcome
9. RAJA RAJASTHANI   I Like It. |Report Abuse|  Link|Jan 29, 2017 10:58:52 PMReply

Amount still not debited from bank account.

Any help welcome
8. MANOHAR LAL   I Like It. |Report Abuse|  Link|Jan 28, 2017 11:54:42 AMReply
I invested Rs15000 in the CPSE ETF. But till date non allotment information received? Anybody got allotment. pl. share the information
7. ashish Aggarwal   I Like It. |Report Abuse|  Link|Jan 26, 2017 1:03:03 PMReply
When units will be credited in demat account
6. pc   I Like It. |Report Abuse|  Link|Jan 23, 2017 1:12:36 PMReply
when money will be debited from account.
how it will be alloted
what will be premium
any one can guide
5. sagar   I Like It. |Report Abuse|  Link|Jan 20, 2017 4:59:13 PMReply
Hi Guy''s Sagar here. Today, I buy CPSE ETF FFO and I''m invested 1st time and don''t know about market. So can you please let me know more about it. It''s best investment or not??
4. koolkaptain   I Like It. |Report Abuse|  Link|Jan 18, 2017 12:29:43 PMReply
Hi guys, I just can''t find out if there''s an option for dividend payout and growth?

They say the first issue gave a return of 32 percent,but how was this return given? Just in appreciation of stock market price or in dividends?

Please let me know? Thanks a lot in advance.
4.1. sjoshi   I Like It. |Report Abuse|  Link|Jan 19, 2017 11:18:03 PM
Only growth option available
3. RAJESH KUMAR SHARMA   I Like It. |Report Abuse|  Link|Jan 18, 2017 10:46:08 AMReply
How much is the rebate available under Rajiv Gandhi Equity Savings Scheme and under which Section of Income Tax Rules ?
2. RAJESH KUMAR SHARMA   I Like It. |Report Abuse|  Link|Jan 18, 2017 10:20:32 AMReply
What is the maximum amount of investment which is eligible under Rajiv Gandhi Equity Savings Scheme and what is the lock in period ?
2.2. Ambika mishra   I Like It. |Report Abuse|  Link|Jan 18, 2017 5:35:44 PM
Rs 50000 and lock in is 3 years
2.3. PRADEEP GUPTA   I Like It. |Report Abuse|  Link|Jan 19, 2017 2:25:53 PM
only for new investor not for old
1. Aura   I Like It. |Report Abuse|  Link|Jan 16, 2017 7:43:54 PMReply
can i apply in physical format as i dont have demat account.. is it possible like we do for other mutual funds
1.1. JAYESH   I Like It. |Report Abuse|  Link|Jan 17, 2017 9:04:59 PM