Do you know why CPSE ETF popular with 4 most Important Reason..... As Investment or Listing Gain avenue in detail analysis.....


What is CPSE ETF?
Central public sector enterprise are those companies in which the direct holding of the central government is 51% or more

How many CPSE ETF issue came till date?

Total issue came 5
March 2014                               4363 cr
Jan 17.                                       6000 cr
March 17.                                  2500 cr
Nov 18.                                   17000 cr
March 19.                                  3500 cr

Which stock are in CPSE index.
ONGC                                    20.43%
NTPC                                     19.54%
Coal India                              19.09%
IOC                                         18.64%
REC.                                        6.72%
PFC.                                         5.49%
Bharat electronics.                   4.94%
Oil India.                                  2.84%
NBCC.                                     1.84%
NLC.                                        0.86%

Sector includes.....
Infra and engineering and
PSU financial

Four reason why CPSE unit gain popularity.....

Better liquidity.....
As low rate unit provide everyone to participate in trading as well as investment. So, flow of demand and supply comes excellent huge in number.

Low cost transaction.....

As there is no hidden cost or any kind of entry or exit load like mutual fund is, so cost of transaction is same like stock everyone trade.

Better yield.....

It has given positive return since its inception from 2014. It run from 17.4 to 27 in 2014-19  period.

Basket of safe PSUs.....

It gives indirect exposure of 10-12 PSUs of government where in few generate profit and few in loss. Moreover dividend payment of such company is highest compare to every other listed company.

CPSE ETF came in following manner .....

CPSE NFO 18/3/2014 came at 17.45 with 5% discount after completion of 1 year

Second came at 25.21 with upfront discount of 5% Jan 2017

Third came at 3.5 % front discount on march 17 @ 26.85

Fourth 4.5 % up front discount on Nov 18 around 25

Last at 25.4840 with 4% discount on march  2019

The initial offering came with promise of holding ETF at least for 1 year to get 5% discount while this time discount is up fronted , so medium to short term view you should take as most of investor do for benefit of discount

Why nifty ETF got popularity much.....

Nifty ETF turned largest due to employee provident fund organization invest only in that fund as low cost mechanism

Because It is investing in large cap stocks nifty is reflecting same through ETF.

Moreover investor should invest with short to medium term view. Even upfront discount is net gain for investor if we assume market remain stable.

Is ETF pay dividend?

Most of company included in CPSE ETF Is known for dividend paying company where few company pay 8-9% yield based on its current market price.

There are two ways to pay dividend.....

First, company or fund management declare advance date for dividend like record date which can be 30-60 days' advance to the actual dividend payment date.

Second, fund manager buys additional amount of unit and distribute proportion wise to everyone as dividend.

Even dividend is actually net zero sum game for investor as on ex date of dividend stock price reduce by amount of dividend declare.


Subscribed ETF if there is upfront discount of more than 3%

Look at market condition like it has reach at such level where margin of safety is not favorable

Look at the price of all included stock in the ETF fund, this days almost all stock middle to low price.

Moreover and most important need the stable government to decide the future of all PSU company for divestment smoothly.

Happy Reading
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