Goldman Sachs Asset Management launched the Exchange-Traded Fund (ETF) of select Central public sector units (CPSE) on 14th Feb 2014.
The CPSE-ETF is an open-ended scheme comprising 10 major PSUs such as ONGC, Gail and Coal India. The new fund offer is for anchor investors (investing above Rs 10 crore) and for non-anchor and retail investors. This new index is another option of Government divesting stake in public sector enterprises.
The CPSE-ETF will have the following stocks with respective weightage:
1. Oil & Natural Gas Corporation –26.72%
2. Gail India –18.48%
3. Coal India –17.75%
4. Rural Electrification Corporation –7.16%
5. Oil India –7.04%
6. Indian Oil Corporation –6.82%
7. Power Finance Corporation –6.49%
8. Container Corporation of India–6.40%
9. Bharat Electronics –2.00%
10. Engineers India –1.13%
Industry wise distribution of funds will be:
1. Energy- 59%
3. Financial Services –14%
5. Industrial Manufacturing –2%
6. Construction –1%
With nearly 60% of the fund being invested in India’s Power Sector; CPSE-ETF works more as a power sector focused fund [my belief].
Analyzing returns from some other power focused funds in India:
1. Reliance Diversified Power Sector -G and
2. Escorts Power and Energy Fund- G
Both the above funds have returned negative growth over the last 3 years.
Ofcourse the CPSE-ETF results may differ and the dynamics of India’s power sector may change as well with a stable and efficient government at the centre that is interested to restructure India’s troubled power sector. Also this being a disinvestment route for the government; there maybe focus on more efficient management of the PSUs.
Not to forget that there is diversification provided through financial companies and metals; others being of little significance.
But is it a risk worth taking? A well diversified equity fund may select the top 2-3 PSUs in investment portfolio compared to other companies/themes/investment opportunities and aim for better returns.
Sources: GoldmanSachs and moneycontrol.com