ELSS version of CPSE ETF to come soon

In her maiden budget, Finance Minister Nirmala Sitharaman announced that Central Public Sector Enterprises (CPSE) Exchange Traded Fund (ETF) will be launched as an Equity Linked Saving Scheme (ELSS), the format of which would be similar to ELSS in mutual funds.

The fund will be one of its kind as no other ETFs comes with a tax benefit. ELSS are those schemes which come with tax deduction benefit up to Rs. 1.5 lakhs under section 80C of Income Tax Act. These schemes also have a statutory lock-in period of 3 years.

CPSE ETF is a Government of India initiative to divest its shareholding in select state-owned companies. Government of India is setting a target of Rs. 1,05,000 crore of divestment receipts for FY 2019-20. Also, foreign shareholding in select CPSE companies will be increased subject to the sectoral limits. It was launched in March 2014 having AUM (Assets Under Management) of Rs. 10,657 crore as on May 31, 2019, having an expense ratio of 0.01 per cent as on May 31, 2019. In 1-year, 3-year and 5-year period, CPSE ETF gave SIP (Systematic Investment Plan) returns of 22.89 per cent, 4.75 per cent and 5.32 per cent, respectively.