Bharat 22 ETF vs CPSE ETF: A sneak peek into the two funds

The subscription for Bharat 22 ETF closes today. The PSU exchange traded fund (ETF) has been in news since it was launched as a part of the Narendra Modi government's divestment drive on August 10, 2017. The government had earlier approved the alternative mechanism through the ETF route to divest its stake in CPSEs. This is the second ETF after CPSE ETF was launched by the government in March 2014.

The CPSE ETF was launched in March 2014 for raising funds through disinvestment of government's share in public sector undertakings. We compare the two ETFs and find out the better option among the two.

Also read: Bharat 22 ETF's subscription in progress: Should you invest?

1. CPSE ETF has 10 stocks of Maharatna and Navaratna firms which are as follows.

ONGC, Coal India, Indian Oil , GAIL India, Power Finance Corp, Rural Electrification Corporation, Container Corporation of India, BHEL, Oil India and Engineers India.

The Bharat 22 ETF comprises 22 stocks. It has leading blue-chips such as ITC (through SUUTI) with 15.2 percent weightage, State Bank of India with 8.6 percent weightage, and Axis Bank (through SUUTI) with 7.7 percent weightage. Bank of Baroda, Bharat Electronics, Bharat Petroleum Corp, Coal India, Engineers India, Gail India, Indian Bank, Indian Oil Corp, Larsen & Toubro, National Aluminium Co, NBCC (India), NHPC, NLC India, NTPC, Oil & Natural Gas Corp, Power Finance Corp, Power Grid Corp of India, Rural Electrification Corp and SJVN are the other constituents of the fund. The fund consists of stocks from six sectors such as capital goods, finance, oil & gas, power, FMCG and metal, metal products and mining.

Hence, Bharat 22 ETF is more diversified than CPSE ETF. 

2. The government gave a five per cent discount at the launch of CPSE ETF to retail investors and again those who held the ETF for at least a year got one fifth loyalty bonus.

A discount of 3 per cent has been offered to all categories of investors in Bharat 22 ETF.

3. The CPSE ETF has clocked 4.56 percent returns till date. In terms of returns till November 15,  the constituents of the two funds are given below. An ETF is a traded security that tracks an underlying asset like a group of companies or commodity.

Bharat 22 ETF

CPSE ETF