Government is planning to go through disinvestment programme through a unique way where it plans to sell its stake in 10 Maharatnas, Navratnas and Miniratnas through Exchange Traded Fund. The 10 PSU are leaders in their respective businesses and are profitable. Goldman Sachs Asset Management, the pioneer in ETF, has been assigned to manage the ETF. It’s a good opportunity for retail investors to participate in the offer as most of the PSU in the CPSE index are in the sector- oil & gas, energy, financial services and logistics- are linked to economic growth and reforms. Uptick in economy (GDP growth rate at 10 year low) and further reforms will benefit these PSUs the most.
10 reason to invest in Goldman Sachs CPSE ETF
Opportunity to participate in 10 Maharatnas, Navratnas and Miniratnas
All the companies in CPSE Index are profit making and have good track record of dividend payment
Discount of 5 % over the issue price
One loyalty unit for every 15 units after one year (equivalent to 6.66% discount)
Almost 60% of index constituent in oil & gas sector and ongoing reforms (reduction in oil subsidy) to benefit these companies
All companies in the index are leaders in their line of business
CPSE Index attractively valued to Sensex and Nifty
Earlier Goldman Sachs Asset Management (India) has announced CPSE (Central Public Sector Enterprise) ETF NFO. The NFO opened on 18th March 2014 for anchor investors and on 19th March 2014 for non-anchor investors.
CPSE ETF is an open ended scheme to be listed on the Exchanges in the form of an Exchange Traded Fund (“ETF”), which tracks the central public sector enterprises (“CPSE”) Index.
CPSE ETF is a unique opportunity for investors to invest in 10 Maharatnas, Navratnas and Miniratnas at a discount of 5% on the “Reference Market Price”1 of the underlying shares of CPSE Index, which will be offered to the CPSE ETF by the Government of India (“GOI”). 6.66% Loyalty Units (One Loyalty Unit will be allocated for every 15 Units held) for eligible Retail Individual Investors2 holding the units continuously from the Allotment Date to the Loyalty Unit Record Date, which will be one year from the NFO allotment date. The non-anchor investors NFO closes on 21st March 2014. Scheme reopens for continuous subscription and redemption on or before 11th April 2014.
Providing portfolio diversification through investment in blue-chip public sector enterprises, CPSE ETF is a play on India’s growth story through the largest companies in the core sector. The CPSE Index constituents are as follows: Oil & Natural Gas Corporation Ltd., GAIL (India) Ltd., Coal India Ltd., Rural Electrification Corporation Ltd., Oil India Ltd., Indian Oil Corporation Ltd., Power Finance Corporation Ltd., Container Corporation of India Ltd., Bharat Electronics Ltd. and Engineers India Ltd.
The CPSE Index is constructed in order to facilitate the Government of India’s initiative to disinvest some of its stake in selected CPSEs through the ETF route. As per data published by the index service provider, as of 13th March 2014, the CPSE index had a PE ratio of 10.52 and dividend yield of 3.51%.
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