Investors make 7-9 per cent return in 11 days from CPSE ETF

Investors have made an absolute return of 7-9 per cent 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 per cent 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 Rs 25.21, and traded between Rs 26.75 and Rs 27.25 during the day .Retail investors, including investors who put in applications upto Rs 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 Rs 12,000 crore, against the base size of Rs 4,500 crore, with an option to retain oversubscription of Rs 1,500 crore."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 per cent 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.