The Finance Ministry is expected to launch Central Public Sector Enterprises Exchange Traded Fund (CPSE ETF) in next two months. On May 2, the Cabinet Committee on Economic Affairs approved setting up of the fund.
This instrument will comprise listed CPSE stocks, each with a fixed weightage in the basket. The instrument aims to minimise market disruptions seen in public offerings of listed CPSEs. It will also increase the Government’s ability to monetise partial stakes in listed CPSEs, some of which have low liquidity and free float. It will broad base retail participation of shares of CPSEs, and also help deepen the market for equity-based products. It is also considered beneficial to the Government from a pricing perspective, as part of the discounts could be back-ended.
ETF is a trading instrument like shares on stock exchanges.
ETFs were first introduced in India in 2001 with the launch of Nifty BeES.
At present, there are 33 ETFs with assets under management of over Rs 11,500 crore, held by 6.2 lakh investors. Gold ETFs dominate the market in the country, as of now.