Govt looks to raise Rs 3,500 cr via CPSE ETF which opens tomorrow

ONGC, IOC, CIL and NTPC top four holdings

Managed by Reliance Mutual Fund, the CPSE ETF has a concentrated portfolio spread across a number of sectors, including oil PSU, energy, PSU financials and infrastructure & engineering. Oil and Natural Gas Corp (ONGC), Indian Oil Corp (IOC), Coal India Ltd (CIL) and NTPC Ltd, all four making up the top four holdings, account for 77.7 percent of the portfolio.

The Nifty CPSE Index trades at a PE (price-to-earnings) ratio of 8.43 compared to the Nifty 50 PE of 26.32. Compared to Nifty 50's 1.25 percent, it offers a dividend yield of 5.52.

"First-time investors would be better off with a well-diversified equity mutual fund than a thematically concentrated portfolio," said Anup Bhaiya, MD and chief executive officer, Money Honey Financial Services.

"Mutual fund investors would do well to invest in actively managed equity mutual funds where chances of alpha creation are high as compared to passively thematic basket of government companies," says Jignesh Shah, founder, Capital Advisors.