What is CPSE ETF – Full Stocks Portfolio, Constituents List, Weightage and Dividend Yield Info in 2023
If you’re an investor looking for a low-cost way to invest in India’s public sector enterprises, the CPSE ETF is worth considering. This exchange-traded fund is made up of stocks from India’s Central Public Sector Enterprises, providing investors with exposure to some of the country’s largest and most established companies.
In this article, we’ll take a closer look at the ETF, including its CPSE ETF stock portfolio, constituent list, performance, and dividend yield information.
The CPSE ETF is listed on the stock exchange and can be bought and sold like any other stock. It is a passive investment vehicle, meaning that it tracks the performance of the underlying CPSE index rather than being actively managed.
CPSE ETF Full Form: Central Public Sector Enterprises Exchange-Traded Fund. The ETF is managed by Nippon India AMC on behalf of the government of India.
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Page Contents
CPSE ETF Stocks Portfolio Constituents List
| Company / Stock name | Sector | % of Total Holdings |
|---|---|---|
| Bharat Electronics Ltd. | Industrial Electronics | 8.53% |
| Coal India Ltd. | Industrial minerals | 16.92% |
| Cochin Shipyard Ltd. | Shipbuilding & allied services | 0.84% |
| National Thermal Power Corporation Ltd. | Power | 19.61% |
| NBCC (India) Ltd. | Construction civil | 1.14% |
| NHPC Ltd. | Power | 3.46% |
| NLC India Ltd. | Power | 0.73% |
| NMDC LTD | Industrial minerals | 5.70% |
| Oil & Natural Gas Corporation Ltd. | Oil exploration | 18.42% |
| Oil India Ltd. | Oil exploration | 2.21% |
| Power Grid Corporation of India Ltd. | Power- transmission | 20.99% |
| SJVN Ltd. | Power | 0.80% |
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What are the Selection Criteria for CPSE ETF stocks?
According to Nippon India AMC; The selection criteria for CPSE ETF stocks are as below. The CPSEs selected to meet the below-mentioned parameters:
- Included in the list of CPSEs published by the Department of Public Enterprise
- Stocks traded (listed & traded and not listed but permitted to trade) at the National Stock Exchange of India Ltd. (NSE)
- Having more than 51% government holding (stake via Govt. of India or president of India) under the promoter category
- Companies having an average free-float market capitalization of more than 1000 Cr. for a six-month period ending December 2019 are selected
- Companies that are IRDA dividend norms complaint shall be considered eligible to be included in the index
CPSE ETF Fund Offers till 2023
The government of India (GOI) used an innovative route to divest its holding in CPSEs via ETF. Here are the CPSE ETF fund offers so far:
| CPSE ETF Tranche | Launch | Subscriptions (Rs. Crs.) | Allotment (Rs. Crs.) | Listing Date |
|---|---|---|---|---|
| New Fund Offer (NFO) | Mar-14 | 4,363 | 3,000 | 04-Apr-14 |
| Further Fund Offer (FFO) | Jan-17 | 13,705 | 6,000 | 31-Jan-17 |
| Further Fund Offer 2 (FFO 2) | Mar-17 | 10,083 | 2,500 | 28-Mar-17 |
| Further Fund Offer 3 (FFO 3) | Nov-18 | 31,203 | 17,000 | 10-Dec-18 |
| Further Fund Offer 4 (FFO 4) | Mar-19 | 30,464 | 10,000 | 01-Apr-19 |
| Further Fund Offer 5 (FFO 5) | Jul-19 | 48,485 | 11,500 | 29-Jul-19 |
| Further Fund Offer 6 (FFO 6) | Jan-20 | 21,707 | 16,500 | 10-Feb-20 |
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CPSE ETF Share Price History
The below chart shows CPSE ETF Share price history over the years. After a lull period of 8 years, The CPSE ETF has given a decent return since 2021.
CPSE ETF Fund Performance
It’s quite disappointing to see the kind of performance the ETF has shown since its launch. The below image shows CPSE ETF’s performance as of 31st May 2023.
The ETF has underperformed compared to all of the major indices. It’s really sad to see the ETF giving negligible returns to investors since its launch in March 2014!
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CPSE ETF Dividend Details
There is a lot of confusion in investors’ minds about whether the ETF gives any dividends to its investors when a company that is part of the ETF gives dividends.
The short answer to this is – NO. The ETF doesn’t give any dividends to its investor when the company that is part of the ETF gives dividends.
The dividend amount is reflected as part of the ETF NAV when the dividend amount is received.
Consider reading – Best dividend paying stocks in India
Benefits of Investing in CPSE ETF Stock
According to Nippon India AMC here are the benefits of CPSE ETF:
- Well-Defined Portfolio: ETF investment strategy & stock selection are clearly defined; it would replicate the Nifty CPSE Index & invest only in companies forming the index in the same proportion as the underlying index
- Diversification: Buying a single unit currently offers a diversification of 12 stocks in the large CPSE companies
- Transparency: Nifty CPSE Index constituents are made available in the public domain on a daily basis by NSE
- Liquidity: ETF units are traded on exchanges & can be easily liquidated during trading hours (subject to the availability of the buyer/Seller). Authorized Participants / Large Investors also have the option of coming to the AMC for procurement/sale of units in creation unit sizes (100,000 units with 1 unit equivalent to 1/100th of Nifty CPSE Index)
- The margin for trading: The ETF is accepted as the margin for trading on NSE & BSE with the applicable haircut
- Sector Exposure with less Idiosyncratic risk: The ETF allows one to take exposure to the large Central Public Sector Enterprise (CPSE) companies across different sectors with relatively less stock-specific risk, as risk gets diversified among the basket of stocks
- Index track Record: Launched in Mar-2014, base date 1-Jan-2009 the index has a track record of 11 years.
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Advantages and Disadvantages of Investing in CPSE ETF
Advantages of Investing in CPSE ETF:
- Diversification: The ETF provides investors with exposure to a diversified portfolio of Central Public Sector Enterprises stocks, reducing the risk associated with investing in individual stocks.
- Low cost: The ETF has a low expense ratio compared to actively managed mutual funds, making it an attractive option for cost-conscious investors.
- High liquidity: As an exchange-traded fund, The ETF trades on stock exchanges, providing investors with high liquidity and the ability to buy and sell shares at market prices throughout the trading day.
- Tax-efficient: Investing in The ETF can be tax-efficient, as dividends received from the ETF are tax-free in the hands of the investor.
Disadvantages of Investing in CPSE ETF:
- Concentration risk: The ETF is heavily concentrated in public sector enterprises, which can be risky if there is a downturn in the sector.
- Limited diversification: While The ETF provides diversification within the public sector enterprises, it does not provide exposure to other sectors or asset classes, potentially limiting the overall diversification of an investor’s portfolio.
- Market risk: As with all equity investments, there is a risk of market volatility, which can impact the value of the ETF.
- Management risk: The ETF is managed by a fund manager, and the performance of the ETF is dependent on the manager’s ability to select and manage the underlying stocks.
Overall, investing in CPSE ETF can provide investors with exposure to the public sector enterprises of India, diversification, and tax efficiency at a low cost.
However, there are risks associated with investing in any equity investment, and investors should carefully consider their investment objectives, risk tolerance, and portfolio diversification before investing in CPSE ETF.
Final Thoughts on CPSE ETF Stocks Portfolio, Constituents List, and Weightage
In conclusion, CPSE ETF is a good choice for investors who want to invest in PSU companies. I have personally invested in the ETF in 2020 and still hold the ETF.
But, you need to keep in mind that most of the stocks that are part of the CPSE ETF Portfolio are cyclical in nature and the performance of the ETF is greatly influenced by Indian Government’s policies.
FAQs on CPSE ETF Stocks Portfolio, Constituents List, and Weightage
What is the expense ratio for CPSE ETF?
The current expense ratio for CPSE ETF is 0.01% which is extremely less compared to actively managed mutual funds.
Where can I purchase CPSE ETF?
CPSE ETF can be purchased in NSE or BSE. You need to have a Demat and trading account to purchase the ETF.
What is the difference between NIFTY 50 ETF and CPSE ETF?
NIFTY 50 ETFs are based on the stocks which are part of the NIFTY 50 index whereas CPSE ETF is an ETF that consists of 12 CPSE companies.
Is it good to invest in CPSE ETF?
Going by the performance of CPSE ETF in the last 7 years; it’s quite disappointing to see that the ETF hasn’t even given any returns to its investors for 7 years. Most of the companies which are part of the ETF are cyclical companies. They perform really well in cycles. If you are a retail investor then there are better opportunities in NIFTY 50 ETF than in CPSE ETF.
What is a CPSE ETF?
A CPSE ETF is an exchange-traded fund that tracks the NIFTY CPSE Total Return index, composed of public enterprises which the government aims to divest from. CPSE stands for Central Public Sector Enterprises. This passive investment option offers exposure to a diversified basket of stocks from the public sector. Start investing in CPSE ETFs for potential returns.
Is CPSE ETF taxable?
Yes, CPSE ETF investments are taxable. Investing in CPSE ETF is like any stock investment which falls under Capital gains tax.
