In this video, we evaluate whether you should invest in the latest CPSE ETF
Edited highlights
0:04 In this video, we evaluate whether you should invest in the latest CPSE ETF
0:46 Before we get into the brasstacks, here is a primer on ETFs
0:49 ETFs is all about investing in a index. The fund collects money from inevstors and invests in securities in the same proportion as the index
1:12 The weightages are same in an ETF as in the index
1:20 In case of the CPSE ETF, the ETF tracks the Nifty CPSE Index
1:37 There are 11 PSEs which constitute this Index
1:56 There are a couple of issues that you need to remember while considering CPSE ETF
2:04 Unlike a broad-based index like Nifty, in this case the Nifty CPSE Index constitutes of only 11 shares
2:12 This means you are not getting the benefit of managing risks from adequate diversification and would be vulnerable to volatility
2:21 This could mean impact of government decisions on PSEs or impact of developments in certain sectors
2:33 Clearly, CPSE ETF is not something that the first time investor would look forward to
2:42 Since it is more like a thematic fund which disinvestment and public sector being the theme, it will be a higher risk and higher volatility investments
3:01 The third thing to keep in mind is that this is a disinvestment related opportunity.
3:13 This opportunity has come about due to the government's disinvestment programme and not due to typical objective of funds to create growth or income
3:35 Government decisions typically influence CPSEs greatly and they may all not be purely based on economic and business considerations since PSEs have other objectives as well.
4:09 CPSE ETF works for those with existing portfolios and those people can take advantage of the 4% discount and make the gain through a sell off later.
