What It
Is..
An
Exchange Traded Fund (ETF) that has a basket of 10 public sector stocks that
will track the CPSE Index.
This
index, which will be used to facilitate the Government of India’s initiative to
disinvest some of its stake in large public sector companies, currently has a
basket of large stocks that are low on valuations as the sectors in which they
operate – power, oil and gas, and capital goods are out of favour.
 |
| Vidya Bala, Fundsindiacom. |
What
You Get..
• A basket
of large public sector companies that are high on dividend yield and low on
valuations, when compared with the market. Please see the table above to see
the difference in valuations of the CPSE index with the rest of the market.
• Discount
of 5% on the “Reference Market Price” of the shares in the index shall be
offered to all investors during the NFO.
• The ETF
is eligible for tax benefits under the Rajiv Gandhi Equity Savings Scheme 2013,
if you are a first time investor in shares by opening a new demat account, or
have not used your demat to buy any shares/securities.
• Get
Loyalty Units: One Loyalty Unit will be
allocated for every 15 units held by retail investors continuously from the
Allotment Date to the Loyalty Unit Record Date, which will be 1 year from the
NFO allotment date.
NFO
Pricing..
The price
allotted to you will be the average (volume weighted average price) price of each
of the stocks traded in the exchange during the NFO period, that is March
19-21. A discount of 5% will be applied on each of these to give you the final
allotment price of the ETF.
You can
invest a minimum of Rs. 5000 and in multiples of Re 1 thereafter.
• If you
are looking to invest in shares of large public sector companies at a discount
to market price.
• If you
are looking for exposure to cyclical themes such as power, and oil and gas,
that may be beneficiaries of regulatory changes and economic recovery.
• If you
are looking for high dividend yield companies – the dividend yield of the CPSE
Index is at present 3.77% as against 1.49% for the Nifty basket.
• If you
are looking for tax benefits under RGESS.
The NFO
opens on March 19 and closes on March 21.
The
author is reach at vidyabala@fundsindia.com
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