CPSE ETF is very much in news today. Find below some details for the same.
WHY TO INVEST IN CPSE ETF
Full form is Central Public Sector Enterprises. It is a good BUY because of the following 5 reasons:
- Discount is given @ 5% by Govt. of India, technically 5% Return on 1st day.
- 4% is the Dividend Distributed by PSU Stocks as against 1.25-1.30% by NIFTY Benchmark, so return addition again by 4%
- NIFTY 50 Current PE is around 20. PSU as a basket is trading at PE of 11. So it is worth buying.
- In 2014, when IPO came, it declared bonus of 15:1 those who stayed for 1 Year so technically 6% return again increased
- As per Rajiv Gandhi Equity Savings Scheme, this scheme is eligible for Tax Benefits to the tune of Max Rs. 50000/- subject to investor fulfilling Eligible Criteria’s of RGESS
This is Follow on Public Offer. IPO launched in 2014 has given a return more than 16%.
FFO Opens From 18th to 20th.
Portfolio is of top 10 PSU (MINI RATNA) Companies including ONGC, INDIAN OIL, PFC, GAIL.
ANSWER OF SOME QUESTION REGARDING CPSE FFO 2
This is an extension of first tranche. First Tranches was 3000 Cr in that Anchor investor – FII – Corporate – Institution all had participated.
In this CPSC 2 fund size is 6000 Cr. out of 1800 Cr for Anchor investor which start on 17 Jan. Remaining 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 corporate etc and Allotment on proportionate base. No first come first serve base or No lottery system Each and every retail investors will get allotment.
Allotment on Average price of 18 19 20 Jan NAV
FOR EXAMPLE CPSE 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 and for Retail investor there is no lock-in period. Floating is very high in this because when it comes in 2014 that time pension fund and Retirement fund were not allowed to invest in ETF but Now Govt allows them to invest 5 % in ETF hence 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 will be offered by Govt. On AVG NAV
Earlier it was name on Goldman Sach But goldman mutual fund recently taken over by Reliance Mutual Fund so it’s now Reliance CPSE ETF FFO. All PSU basket companies in this CPSE are giving Dividend continue last 10 years.
Documents are required for this ETF
- Cheque ( No third party allowed)
- Client Master list or Demat holding statement (No original required)
- Pan card xerox
- KYC form