Union Finance Ministry and Securities and Exchange Board of India (SEBI) on 11 March 2014 jointly finalized the norms of investment for setting up Central Public Sector Enterprises (CPSE) - Exchange Traded Fund (ETF). The Empowered Group of Ministers (EGoM) headed by Finance Minister P. Chidambaram had approved floating the CPSE ETF.
• Individual investors can invest for CPSE-ETF in between 5 thousand rupees to 10 lakh rupees.
• CPSE ETF is an open-ended fund and the units would have a face value of Rs.10 per unit.
• The CPSE – ETF comprised shares of 10 blue-chip companies.
• Companies listed in the ETF basket are ONGC, IOC, Coal India, GAIL, REC, Oil India, Container Corporation, Power Finance, Engineers India and Bharat Electronics Ltd.
• The ETF is expected to fetch 3000 crore rupees to the exchequer. The CPSE-ETF is an additional way to meet the target of Disinvestment of Government of India.
• Goldman Sachs is acting as the asset management company for the ETF.
• This first-of-its-kind ETF is also likely to have certain unique features like loyalty incentive and upfront discount to attract retail investors.
CPSE-ETF is made up of a basket of shares of different CPSEs that tracks an index fund. ETF will trade like a stock on the exchange. Gold ETFs dominate the market in India.
ETFs were introduced in India in 2001. At present, there are about 33 ETFs with assets under management of close to 11500 crore rupees held by 6.2 lakh investors.
When: 11 March 2014