CPSE ETF is the central public sector enterprise [CPSE] exchange-traded fund [ETF]. An ETF is defined as a security that tracks the index and is traded on the stock exchange. It is made of equity investments by the ten largest public sector companies. The companies involved in the equity investments are as follows:
- Indian oil
- Power finance
- Oil India
- Container corp
- Coal India
CPSE ETFs are preferred by people interested in the stock exchange market. Characteristic features of the CPSE ETF funds are mentioned below:
- They are considered as open funds with a particular lock-in period.
- These funds can be easily purchased in the stock market.
- You can easily sell the CPSE ETF funds in the market.
- These funds are equity investments, so a minimum investment of Rs. 5,000 is required.
- The proportion of the underlying assets remains the same, so they are also considered passive funds. Whereas in mutual funds, the portfolio is managed, and in ETF, it is the same.
- The expense ratio of the ETFs is low.
The CPSE ETF targets the largest companies in the country. These companies are successful in their fields and preferred for various investments. Most of these companies are essential for the Indian economy, so the investment in ETF is low risk. The question in the generation of pandemics and privatisation is why we should invest in ETFs? Some of the advantages of ETFs are mentioned below. They are as follows:
The CPSE ETF provides the chance to investors to invest in Maharatna and Navratna PSEs. The PSEs are efficient and financially a good method to invest money.
- They have attractive valuations.
- CPSE ETF has a strong dividend yield.
- The investment of ETF is basically in the companies that are considered as the market leaders.
- With major benefits, the CPSE ETF has many risks also. They are mentioned below:
- These funds have limited exposure to the stocks in the market. This increases the risk as the major investors of the stock are in oil, gas, and energy fields.
- According to the profile and capabilities, the investment is considered risky for some investors.
- Many sectoral complexities are associated with the CPSE ETF funds.
If you are interested in investing your money in CPSE ETF funds they you have to be ready for some risks. Some of the major risk factors related to the funds are mentioned above, so make your decision wisely. But if you want to low risk or moderate one on your investments, you can inquire about the equity mutual funds in India. Many people of the country prefer SIP as they are considered a smart way to invest. So you contact professionals or research in the areas such as how to start sip investment for better results and ideas.