The third Further Fund Offer (FFO) of the CPSE Exchange Traded Fund (ETF) open on November 28th and closes on November 30th. The CPSE ETF and Bharath 22 ETFs were created to carry out the govt’s divestment program. Rs 11,500 crores have been raised from the 4 tranches of CPSE ETF so far.
The govt is hoping to raise Rs 8,500 crores from this issue but depending on the response it may raise up to Rs 14,500 crores. A discount of 4.5% is being offered to all investors.
About CPSE ETF
The CPSE ETF tracks the CPSE index and consists of 11 Central Public Sector Enterprises (CPSEs). Here are the constituents and their weightages.
| Company | Sector | Weightage |
|---|---|---|
| NTPC | Power | 19.55% |
| Coal India | Mineral/Mining | 19.13% |
| Indian Oil Corp | Petroleum Products | 18.94% |
| ONGC | Oil | 18.89% |
| REC Ltd | Finance | 6.18% |
| Power Finance Corp | Finance | 5.49% |
| BEL | Capital Goods | 4.94% |
| Oil India Ltd | Oil | 3.45% |
| NBCC | Construction | 1.66% |
| NLC India Ltd | Power | 0.95% |
| SJVN Ltd | Power | 0.64% |
Sectoral composition
| Industry | Weightage |
|---|---|
| Oil | 22.34% |
| Power | 21.14% |
| Minerals/Mining | 19.13% |
| Petroleum Products | 18.94% |
| Finance | 11.67% |
| Capital Goods | 4.94% |
| Construction | 1.66% |
Interestingly the basket of stocks have a combined dividend yield of 5.25% vs 1.27% of Nifty 50.
The ETF has an expense ratio of 0.07%
Here’s how the discount on the ETF is calculated:
How to apply?
We will open up the order collection page starting November 28th here CPSE ETF - Zerodha and you can place order by logging in with your Kite credentials. Units will be credited with 15 working days if you receive an allotment.
You need to have sufficient funds in your trading account in order to apply for this issue.