In­vestors Make 7-9% in 11 Days from CPSE Fund

Ex­perts say long-term in­vestors can hold ETF’s units, but limit it to 5-10% of to­tal eq­uity port­fo­lio

The Economic Times - - Smart -

In­vestors have made an ab­so­lute re­turn of 7-9% on the fur­ther fund of­fer (FFO) of Cen­tral Pub­lic Sec­tor En­ter­prises Ex­change Traded Fund (CPSE ETF), man­aged by Reliance Mu­tual Fund. These gains, which in­clude a 5% up­front dis­count for those who ap­plied in the of­fer, were made in a pe­riod of 11 days. The units, which were listed on Tues­day, were of­fered to in­vestors at ₹ 25.21, and traded be­tween ₹ 26.75 and ₹ 27.25 dur­ing the day.

Re­tail in­vestors, in­clud­ing in­vestors who put in ap­pli­ca­tions upto ₹ 2 lakh, got full al­lot­ment for the units they ap­plied for. “While a few savvy in­vestors booked prof­its and flipped trades, long-term re­tail in­vestors con­tinue to re­main in­vested in the fund,” says Ru­pesh Bhansali, head (dis­tri­bu­tion), GEPL Cap­i­tal. The FFO is­sue was over­sub­scribed re­ceiv­ing bids for ₹ 12,000 crore, against the base size of ₹ 4,500 crore, with an op­tion to re­tain over­sub­scrip­tion of ₹ 1 , 5 0 0 c rore. “Given the low ex­pense ra­tio of 6.5 paisa, high qual­ity com­pa­nies in the port­fo­lio and a good div­i­dend yield, in­vestors can con­tinue to hold the ETF in their port­fo­lio. How­ever, since it is an en­ergy-fo­cused port­fo­lio, limit to­tal al­lo­ca­tion to not more than 5-10% of the eq­uity port­fo­lio,” says Jig­nesh Shah, founder, Cap­i­tal Ad­vi­sors.

This FFO is part of the gov­ern­ment’s dis­in­vest­ment pro­gram. The com­pa­nies con­sti­tut­ing the CPSE In­dex are bluechips in­clud­ing ONGC, Coal In­dia, In­dian Oil, Gail, Power Fi­nance, REC, Con­tainer Corp, Bharat Elec­tron­ics, Oil In­dia and En­gi­neers In­dia.

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