Reliance Mutual Fund CPSE ETF subscribed 4 times on the first day. Should you invest?

The government's Central Public Sector Enterprises based Exchanged Traded Fund (CPSE-ETF), a part of larger disinvestment program of Ministry of Finance, opened on Tuesday. Reliance mutual fund aimed to raise up to Rs 4500 crore through the CPSE ETF. The issue opened for anchor investors on Tuesday , who put in Rs 6000 crore against Rs 1,500 crore reserved for anchor investors. Nomura, Morgan Stanley, SBI, LIC, Axis Bank and Birla MF were some of anchor investors. The CPSE is a theme based fund that focuses on energy, oil and gas companies. Vidya Bala, Head-Mutual Fund Research at FundsIndia.com says, "Since this ETF is almost like a theme fund, one should not expose more than 10-15 per cent of their equity portfolio in this ETF. Only investors who have experience in the stock market and are willing to monitor the performance of the sectors (oil and gas and metals) in which the ETF has high weights should consider this." It is imperative to decide to invest on the basis of your risk appetite. Beniwal suggests a similar approach," You can invest a minor portion of your portfolio in the CPSE ETF provided you understand the risks that go with a thematic fund and commodity based stocks and do not have over exposure to PSUs and the energy sector."

Beniwal says, that there is a lot of government involvement in major business decisions for these companies which can go either ways. However, based on past performance, he expects it to give good returns this time as well. Vidya Bala also advises to be cautious of the risks involved as it is a thematic fund. She adds, "For investors looking into investing for the long-term, it can be a high dividend yield portfolio as PSUs are typically high dividend payers. But the fund has not so far declared dividends, so one should not invest in the ETF expecting dividends."