What is CPSE ETF

What is CPSE ETF : Central Public Sector Enterprises (CPSE) ETF, which tracks the Nifty CPSE Index, is a concentrated portfolio of 10 stocks ( Maharatna - Navratna-Miniratna )   whose main aim is to help the Government of India (GOI) in disinvesting its stake in a few CPSEs via the ETF route. 
There is an upfront discount of 3.5% ( in earlier 2 issue discunt was 5% ) per cent on the Further Fund Offer (FFO) Reference Market Price to the stocks included in the index. To add on to it, this ETF will get the benefit of Rajiv Gandhi Equity Savings Scheme (RGESS). 

Investment strategy 

The fund will invest into stocks, which are the constituents of Nifty CPSE Index, in the same proportion as the Index. The stocks included in this index must fulfil the following parameters. 


• Be a part of the list of CPSEs published by the Department of Public Enterprise.
• Be Listed at National Stock Exchange of India Ltd (NSE)
• Have more than 55% Government Holding under promoter category.
• Have average Free Float market capitaliza f more than INR 1000 crore for six month period ending June 2013 
  Have paid dividend of not less than 4% including bonus for the seven years 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,June 28, 2013 
  
  
• Portfolio analysis 
  The portfolio comprises of 10 Maharatna and Navaratna CPSEs whose weightage in the index are given below. 
  
  
  
  

A careful analysis of the above table and chart shows that ~ 63 per cent of the surplus is concentrated into 3 stocks, i.e. Oil & Natural Gas Corporation, Coal India and Indian Oil Corporation. As far as the sectoral composition goes, around 57.25 per cent of the concentration is into energy which comprises of stocks like Oil & Natural Gas Corporation, Indian Oil Corporation, GAIL (India) and Oil India. On the other hand, metals constitute 20.68 per cent of the total surplus. 

It is interesting to note here that only 3 stocks (Oil & Natural Gas Corporation, Coal India and GAIL (India) are a part of the NIFTY 50 constituting around 3 per cent of the index, while 4 of the stocks (Bharat Electronics, Indian Oil Corporation, Oil India and Power Finance Corporation) are included in NIFTY Next 50. On the other hand, Container Corporation of India is a part of NIFTY 100 while Engineers India and Rural Electrification Corporation are included in NIFTY 200 Index. Hence, we we can safely assume that this is a thematic ETF which is a basket of concentrated large cap stocks from the Public Sector Undertakings (PSU) space. 

Please note that the current issue if Follow-on public issue (2)

Issue open on 15th Mrach 2017 - 17th March 2017 

Issue size 2500 Cr, 

Minimum Investment Rs-5000  thereafter multiple of 1

Discount 3.5 across the category 

CPSE ETF has return of 42% since it's launch of 2014 

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