Table of Contents :
What is CPSE ETF?
Central Public Sector Enterprise (CPSE) Exchange Traded Fund is a thematic fund that pools in resources from numerous investors and invests in government-owned companies. It tracks the underlying index of CPSE, which consists of several public sector firms such as Indian Oil Corp, Coal India, Bharat Electronics, etc.
It is a part of the government’s disinvestment programme that aims to raise over ₹1 lakh crore by selling its stake in various Public Sector Units (PSUs). CPSE ETF is a passively managed fund that just invests its total assets under management in the same proportion as that in NIFTY CPSE Index.
The returns generated from investment in this fund more or less equal to the gain made by NIFTY CPSE index, before adding any expenses, and taking into account the tracking error.
Features of CPSE ETF
- Nippon India Asset Management Company manages the fund and is responsible for issuance of fresh units for subscription of the fund over the years.
- Owing to its passive management, CPSE ETF has a low expense ratio.
- Investment in this fund can be considered as a pure equity investment as the invested amount is used to buy equity ownership of high-end public sector companies. There is no diversification in terms of asset classes.
- Minimum investment amount for CPSE ETF is ₹5000. There is no lock-in period for your investment, and being an open-ended scheme, one can easily trade the fund units on the stock exchanges of India.
- Majority of the portfolio is skewed towards the Energy and Oil Sector, which makes it a relatively risky investment option. However, the companies are few of the largest public-sector firms that have a strong management team and steady cash flows.
Why should you invest in CPSE ETF?
- Investment in this ETF enhances the yield considerably for a retail investor as the NAV is offered on a discounted value, and upswings of stocks in the short term aids investors in making short term capital gains.
- Since its launch in the year 2014, it has delivered impressive returns. However, in the last 2 years, PSUs are not performing upto the mark owing to tense economic environment. Through this fund, an average Indian investor gets a chance to take part in the revival of Public Sector Enterprises.
- Investors who’ve stayed invested in the fund for more than a year has also received loyalty points. However, it is not advisable to stay invested for long term, as the historical return data of PSUs over a long period of time doesn’t portray a bright picture.
How to invest in CPSE ETF?
Nippon India issue fresh units of the CPSE ETF from time to time, allowing retail investors to buy equity ownership of the underlying firms. Recently, in July 2019, it launched its 6th issue of subscription to the fund.
However, one doesn’t need to wait for the next tranche to buy units of the fund, s/he can simply buy it in the secondary market, provided they have a demat trading account.
Units of the fund are traded on the stock exchanges of India, where the investors can directly make the buy/sell call. This flexibility makes investment in this fund one of the preferred choices of investors.
Tax Benefit from Investment in CPSE ETF
In the recent budget presented by the Finance Minister Nirmala Sitharaman, it was announced that investment in CPSE will get tax benefits like that from Equity Linked Savings Scheme (ELSS).
Currently, investments upto ₹1.5 lakh in ELSS are eligible for tax deductions under Section 80(C) of the Income Tax Act. Although, the proper plan and clarifications on slabs for tax benefits on investment in ETF is still awaited.
Here is a List of Top Exchange Traded Funds (ETF) in India
| ICICI Prudential Banking and Financial Services Fund |
| UTI Sensex ETF |
| Canara Robeco Gold ETF |
| Motilal Oswal Nasdaq 100 ETF |
| Reliance ETF Liquid BeES |
| SBI – ETF Nifty Bank |
| Nippon ETF Bank BeES |
| SBI – ETF Gold |
| Quantum Gold Fund |
| LIC MF ETF – Sensex |
| Nippon ETF Sensex |
| Kotak Sensex ETF |
| Invesco India Nifty ETF |
| SBI – ETF Nifty 50 |
| ABSL Nifty ETF |
| SBI – ETF BSE 100 |
| Nippon ETF Nifty 100 |
| Nippon ETF Infra BeES |
| Nippon ETF NV20 |
| Kotak NV 20 ETF |
| SBI – ETF Nifty Next 50 |
| Nippon ETF Junior BeES |
| Nippon ETF Hang Seng BeES |
| Nippon ETF Consumption |
| Nippon ETF Dividend Opportunities |
| Nippon ETF Liquid BeES |
| IIFL Nifty ETF |
| Reliance Shares Gold ETF |
| Axis Gold ETF |
| Invesco India Gold ETF |
| IDBI Gold Exchange Traded Fund |
| Kotak Gold ETF |
| ICICI Prudential Gold ETF |
| UTI Gold Exchange Traded Fund |
| Nippon ETF Gold BeES |
| SBI – ETF Gold |
| Birla Sun Life Gold ETF (G) |
| HDFC Gold Exchange Traded Fund |
| SBI – ETF Nifty Bank |
| UTI Sensex Exchange Traded Fund |
| HDFC Sensex ETF |
| Nippon ETF Long Term Gilt |
| Nippon ETF Nifty BeES |
| ICICI Prudential Nifty ETF |
| SBI – ETF Nifty 50 |
| UTI Nifty Exchange Traded Fund |
| HDFC Nifty 50 ETF |
| Kotak Nifty ETF |
| IDFC NIFTY ETF |
| SBI-ETF 10Y Gilt |
| ICICI Prudential Nifty 100 ETF |
| SBI – ETF BSE 100 |
| ICICI Prudential NV20 ETF |
| SBI – ETF Nifty Next 50 |
| ICICI Pru Midcap Select ETF |
| Nippon ETF PSU Bank BeES |