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Two years after it launched a successful CPSE Exchange Traded Fund (ETF), the Centre has now set its sights on the creation of yet another ETF. This time too the proposed ETF will primarily be based on listed central public sector enterprises (CPSE) shares.
The Department of Investment and Public Asset Management (DIPAM) has now invited expression of interest for being appointed as “advisor” to the Government for the entire process.
Merchant bankers, investment bankers, consulting firms, financial institutions and asset management companies can submit their bids by July 11, DIPAM has said. The bids could be submitted either singly or as a consortium.
ETFs are innovative products that provide exposure to an index or a basket of securities that trade on the exchange like a single stock. They are basically an innovation to traditional mutual funds.
In recent years, ETFs — which offer flexibility of a stock and protection of a fund — have been a big draw among retail investors.
This is more so after retail investors understood the primary benefits of diversification, risk control and lower transaction costs provided by this financial instrument.
An equity ETF invests in stocks that comprise an index.
The CPSE ETF — launched in 2014 — mirrored the returns of the National Stock Exchange’s CPSE index. It held exactly the same stocks that make up the CPSE index and in the same proportions.
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