The government will soon launch an exchange-traded fund that comprises scrips of 11 bluechip PSUs with a view to garnering Rs 3,000 crore this fiscal. An empowered group of ministers headed by finance minister P Chidambaram met on Friday to finalise the contours of the ETF.
Disinvestment secretary Ravi Mathur said: ?We have finalised the (ETF) basket on Monday. Eleven companies will be in the basket. Based on the dividend yield and market capitalisation, we will see how much weightage each stock will have in the fund.?
The companies that would form part of the ETF basket are ONGC, Coal India, GAIL, Power Grid, REC, Oil India, Container Corp, Power Finance Corp, Indian Oil, Engineers India and Bharat Electronics. ONGC and Coal India will form a large chunk of this index. Given their market relative to other companies in the list, ONGC is expected to have about 25% weightage and Coal India about 17-18%.
Mathur said the department of disinvestment will now file the necessary documents with market regulator Sebi and the ETF would be launched in a month’s time. ETF is a security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange. The PSU ETF, which would help the government to add to the disinvestment kitty, was approved by the cabinet last year. Goldman Sachs is acting as the asset management company for the ETF.
ETFs were introduced in India in 2001. Currently, there are about 33 ETFs having assets under management of close to Rs 11,500 crore and held by 6.2 lakh investors. Gold ETFs dominate ETF market in India.
