FinMin plans to launch second CPSE ETF this fiscal
With the revamp of the existing CPSE ETF stuck in procedural hurdles, Finance Ministry is planning to launch a new Exchange Traded Fund (ETF) comprising stocks of 10 PSUs in the current fiscal.
The government had launched the first ever CPSE ETF, comprising scrips of 10 PSUs, in March 2014, under which retail investors have to invest a minimum of Rs 5,000 to buy units. It had then garnered Rs 3,000 crore to the exchequer.
“The DIPAM will soon place before Finance Minister Arun Jaitley the proposal of launching a new CPSE ETF,” sources said. The Department of Investment and Public Asset Management (DIPAM) was initially planning to revamp the existing CPSE ETF to make it more retail investor friendly. However, before the process could be completed, CPSE ETF fund manager Goldman Sachs sold off its mutual fund business in India.
“The revamp plans of the existing ETF is stuck as the transfer of fund management of CPSE ETF from Goldman Sachs to Reliance MF is awaiting regulatory clearance,” sources said.
In October, Reliance Capital Asset Management (RCAM) had announced taking over of global giant Goldman Sachs’ mutual fund business in India for Rs 243 crore. The deal has got approval of the Competition Commission in January 2016.
The 10 PSUs which are part of the CPSE ETF basket are ONGC, GAIL India, Coal India, Indian Oil, Oil India, Power Finance Corp, Rural Electrification Corp, Container Corp, Engineers India and Bharat Electronics. An ETF is a security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange.
Sources said after securing approval from the Finance Minister, the disinvestment department will appoint a new fund manager and then decide on the composition of stocks of the new Exchange Traded Fund basket.