The Department of Investment and Public Asset Management (Dipam), the arm of the government that looks after disinvestment of public sector companies, is planning to come up with theme-based exchange-traded funds (ETFs) comprising listed central public sector enterprises and government-owned banks in the next financial year.
Atanu Chakraborty, secretary, Dipam, told Business Today that since there are already two multi-sectoral CPSE ETFs aside from several Sensex and Nifty ETFs, the department is now planning to launch theme-based ETFs.
Dipam has in the past two years used ETFs as a tool of disinvestment. It has already launched two equity ETFs - CPSE ETF and Bharat 22 - and also has a plan for a debt ETF.
The most likely themes that the department is working on are financials and energy. However, Chakraborty said that they would also look beyond these themes."We are looking at how the risks are cancelling out. It is very important that the individual company risks get cancelled out so that it is only the systemic risk that the investors are exposed to," says the Dipam Secretary, when asked about the details of the ETFs.
The government has been using ETFs as a tool for disinvestment for the past few years. It launched the first - CPSE ETF managed by Reliance Mutual Fund - in 2016, and Bharat 22 managed by ICICI Prudential in 2017.
The government has collected over Rs 41,000 crore over the last three years from disinvestment through ETFs. Out of the Rs 53,500 crore disinvestment in the current financial year so far, Rs 35,300 crore have come through ETFs. In the current financial year, the government has a target of Rs 80,000 crore through disinvestment.
Exchange-traded funds are mutual funds, which are traded on exchanges. However, unlike other mutual funds, NAVs or prices of ETFs can be seen real time on exchanges. In case of other mutual funds, the NAV is announced daily after the stock market closes.