PSU ETF Document Filed, To Be Unveiled In March

In January the Empowered Group of Ministers (EGOM) had approved the stock mix of ETF. Following this the Department Of Disinvestment (DOD) had filed the requisite document to SEBI. ETF is slated to garner Rs 3000 crore to the government as alternative ‘disinvestment proceed’. Till now 11 of the top PSU stocks formed the part of ETF, now Powergrid is out of the bunch as it has a got lock-in period following FPO. Dalal Street in its January issue had informed about the PSU ETF hitting the market in February-March. 

The stocks that are a part of ETF includes heavyweight like ONGC, Coal India, GAIL and Indian oil while at the same time Navratanas like Power Finance, REC, Oil India, EIL, Concor and BEL are also there in the basket. As far as structure of ETF goes, all the stocks will have a weightage in the basket according to their market price and government will transfer 1 or 2% of their holdings into the basket, which will work as an underlying asset for the ETF. Out of this basket the ETF units will be allotted to the investors. Goldman Sachs is setting up this ETF. The idea of setting up an ETF was mooted to curb the volatility in PSUs stock. 

Currently there are more than 30 ETFs that are already trading on Indian bourses, whose underlying assets are like gold, commodities, equities etc, PSU ETF would work in the same fashion. The best part in ETF is that though investors don’t acquire the assets, the appreciation in the investment is perfectly like the underlying assets sans the volatility. “Currently there are 45 listed PSU stocks and out of this only 11 have been chosen, but taking a look at the response of the investors towards first ETF, extra basket may come in future,” informs a senior DOD official.