An 'Exchange Traded Fund' (ETF), an investment fund traded on stock exchange, would be launched for investors in October-November this year, a Union Finance Ministry official said on Thursday. ETF's has put a target of Rs 3000 crore and so far Rs 1400 crore have been raised, Ravi Mathur, Disinvestment Secretary, Ministry of Finance, told a press conference in Jaipur.
"ETF is an investment fund that is traded on a stock exchange, just like stocks (also like any mutual fund), and it holds assets such as stocks, commodities or bonds and trades around its net asset value (NAV) over the course of the trading day", Mathur said.
"ETFs would be an attractive investment because of their low costs, tax efficiency and stock-like features", Mathur who came to address a joint seminar with National Stock Exchange of India Ltd (NSE)said. There will be an attractive discounts at the time of issue as well as loyalty bonus to the retail investor, to encourage all classes of investors, specially retail investors to invest in this product, the secretary said.
ETF's investment index would be framed, he said, adding the minimum investment size for retail investors would begin from Rs 10,000 or Rs 15,000. ETF and Central Public Sector Enterprises (CPSE) will consist of listed CPSE stocks which have had a strong performance, and so far six companies have been listed, he said.
It will be a low cost, low risk and well diversified equity product, and give retail investors an opportunity to buy a low cost product that represents a combination of various blue chip public sector companies across sectors, thereby providing healthy diversification while minimising concentration risks, he said.
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