CPSE ETF

The CPSE ETF (Central Public Sector Enterprise ETF) is a Government of India exchange-traded fund that tracks the Nifty CPSE Index , a concentrated basket of central public sector enterprise shares. It was launched in March 2014 as a disinvestment vehicle, lets a retail investor hold leading PSU stocks in a single instrument, and is managed by Nippon India Mutual Fund . It was the first government-promoted ETF in India and remains a core tool in the state’s disinvestment programme.

The fund concentrates on energy, power and PSU finance, so it behaves like a sector bet rather than a broad-market holding. Its declared NAV was about Rs 97.56 on 17 June 2026, and it carries one of the lowest expense ratios in the industry at roughly 0.05 per cent. This article sets out what the CPSE ETF is, the index it tracks and its constituents, the further fund offer programme that built its assets, the taxation, and how it differs from the broader Bharat 22 ETF .

What the CPSE ETF is

The CPSE ETF holds the shares of central public sector enterprises in the proportions set by the Nifty CPSE Index and lists its units on the National Stock Exchange and Bombay Stock Exchange , where they trade through the day like a share. A unit is a fractional claim on the whole basket, and the fund follows a passive mandate: it seeks to replicate the index return before expenses rather than to pick stocks.

The government created the structure to disinvest stakes in PSUs at scale through a single listed instrument rather than selling each company piecemeal. Instead of running separate offers for sale across a dozen state-owned firms, the Department of Investment and Public Asset Management (DIPAM) bundled the holdings into one ETF and sold units to the public, with the proceeds counting toward the annual disinvestment target.

The original new fund offer in March 2014 was managed by Goldman Sachs Asset Management India. Reliance Capital Asset Management, since renamed Nippon India Mutual Fund, acquired the Goldman Sachs India fund business in a deal that completed in 2015, and the CPSE ETF has been run by Nippon India ever since.

Nifty CPSE Index and constituents

The Nifty CPSE Index was launched on 18 March 2014 with a base date of 1 January 2009 and a base value of 1000. It is calculated on a periodic capped free-float methodology, so weights are reset toward a cap at quarterly rebalancing in March, June, September and December to stop any single name dominating. The index holds 12 stocks spanning five sectors: power, oil, gas and consumable fuels, capital goods, metals and mining, and construction.

As of 17 April 2026, the largest weights in the Nifty CPSE Index were as follows.

The top five names account for over 84 per cent of the basket, and almost all of the index sits in energy, power and capital goods. The constituent list has changed across the years as the government revised its disinvestment plans and as NSE Indices reconstituted the index, so the names and weights above are a snapshot rather than a permanent composition.

Sector concentration

The index is heavily skewed toward energy and power producers, with capital goods through Bharat Electronics and Cochin Shipyard, plus oil and gas through ONGC and Oil India. There is no information technology, no private banking and no consumer exposure. That concentration is the defining feature of the CPSE ETF: it rises and falls with the PSU and energy cycle, government capital-allocation decisions and the policy environment for state-owned firms, rather than with the broad market.

Further fund offers

The government topped up the CPSE ETF through a series of further fund offers (FFOs), each adding new units and raising fresh disinvestment proceeds while the existing units kept trading on the exchange. The collections, which were repeatedly oversubscribed against capped issue sizes, ran as follows.

Because each issue was capped, large sums were refunded to investors when demand exceeded the size on offer, as with the roughly Rs 20,464 crore returned after the FFO 3 collection of about Rs 31,203 crore. Across the tranches, the programme drew aggregate subscriptions of roughly Rs 1,38,303 crore against an aggregate issue size of about Rs 50,000 crore.

Each FFO carried features designed to pull in retail money: an upfront discount to NAV, typically in the region of 3 to 5 per cent across tranches, a substantial allocation reserved for retail investors, and in some tranches a loyalty bonus for investors who held their units for a stated period. The discount lowered the effective cost basis and was a large part of why the FFOs were so heavily subscribed.

Taxation

The CPSE ETF is equity-oriented , since it invests in Indian listed equity, so it is taxed like listed shares.

For units held more than 12 months, long-term capital gains are taxed at 12.5 per cent on gains above the Rs 1.25 lakh annual exemption under Section 112A , the rate that applies to transfers on or after 23 July 2024. For units held 12 months or less, short-term capital gains are taxed at 20 per cent under Section 111A , raised from 15 per cent by the Finance (No. 2) Act, 2024 for transfers on or after that date. Both carry the applicable surcharge and cess. Where units were bought at an FFO discount, the discounted purchase price is the cost of acquisition for computing the gain.

Trading mechanics

The CPSE ETF trades on the exchange between 9:15 am and 3:30 pm like any listed security, and its units settle on a T+1 cycle into the buyer’s demat account. As with a Nifty 50 ETF , Authorised Participants keep the on-screen price close to the value of the underlying basket: they create units by delivering the 12 constituent stocks to the fund and redeem units by taking the basket back, arbitraging away any gap between the market price and the indicative NAV.

That arbitrage works less smoothly for a concentrated basket than for the deep, liquid Nifty 50. The CPSE basket is narrow, and several constituents are state-owned firms with limited public float, so the bid-ask spread on the CPSE ETF can be wider and its price can drift further from the indicative NAV during sharp moves than a broad-market ETF does. A retail buyer is better served by a limit order placed mid-session, and by checking the displayed price against the published iNAV before dealing, than by a market order into a thin book. The tracking error against the Nifty CPSE Total Return Index also tends to run wider than for a Nifty 50 ETF , because rebalancing a concentrated, partly illiquid basket costs more.

Performance and cyclicality

The CPSE ETF’s returns track the PSU and energy cycle rather than the broad market, which produces long stretches of underperformance against the Nifty 50 followed by sharp catch-up rallies when PSUs are in favour. The Nifty CPSE Index has delivered strong multi-year numbers off the post-2020 PSU re-rating: the index showed a five-year return of roughly 262 per cent measured to mid-2026, far ahead of the broad market over that window. Those figures flatter the period chosen. Through the years when private-sector names led the market, the same basket lagged, and the concentration that drives the upside in a PSU upcycle drives the drawdown when the cycle turns. A buyer extrapolating the trailing five-year return forward is mistaking a cyclical rally for a structural one.

Role in disinvestment

The CPSE ETF gave the government a route to monetise minority stakes in many PSUs through one instrument. A single FFO retired part of the disinvestment target without separate offers for each company, retail investors took up units at a discount, and the listed ETF provided ongoing price discovery for the basket. The programme raised tens of thousands of crore across its tranches while widening retail participation in PSU equity, and it became the template the government then extended with the Bharat 22 ETF.

CPSE ETF versus Bharat 22 ETF

The CPSE ETF and the Bharat 22 ETF are the two main government disinvestment ETFs, and they were built to do different jobs. The CPSE ETF is a concentrated bet on a dozen energy-heavy central PSUs. The Bharat 22 ETF was designed in 2017 to address that concentration: it spreads across 22 names and six sectors and, crucially, includes government stakes in private-sector blue chips held through the Specified Undertaking of the Unit Trust of India (SUUTI).

The presence of L&T, ITC and Axis Bank in the Bharat 22 basket is the clearest structural difference: those are not PSUs but holdings the government inherited through SUUTI, and they give Bharat 22 a private-sector and financials tilt the CPSE ETF lacks entirely. An investor choosing between the two is choosing between a focused PSU energy bet and a broader, but still government-themed, basket.

Considerations for investors

The CPSE ETF carries concentration and cyclicality that a broad index fund does not. Over 80 per cent of the basket sits in five energy, power and capital-goods names, so a swing in oil prices, the power-sector capital cycle or PSU policy moves the whole fund. Each large constituent is also a single-stock risk in its own right given the weights. State ownership adds a further layer, since capital allocation and dividend policy at these firms can be shaped by government priorities rather than purely commercial ones.

These features make the CPSE ETF a satellite rather than a core. It suits an investor taking a deliberate tactical view on PSUs during a favourable cycle, an investor capturing an FFO discount, or a small allocation inside an otherwise diversified portfolio. It is a poor candidate for a single long-term equity holding, where a Nifty 50 ETF or index fund gives broad-market exposure without the sector bet. The PSU fund category and sectoral and thematic funds more broadly carry the same satellite logic.

See also

• Mutual funds in India
• ETF in India
• Equity ETF in India
• Bharat 22 ETF
• Nifty 50 ETF
• Nifty BeES
• Bharat Bond ETF
• PSU Fund
• Sectoral and thematic mutual fund
• Energy Fund
• Infrastructure Fund
• Nippon India Mutual Fund
• ICICI Prudential Mutual Fund
• Government of India disinvestment
• Index fund in India
• Nifty 50 Index Fund
• Active versus passive equity in India
• How to buy an ETF on the NSE
• Tracking error
• NAV
• Equity mutual fund taxation in India
• Section 112A
• Section 111A
• Securities transaction tax
• Demat account
• National Stock Exchange
• Bombay Stock Exchange
• FMCG and consumption fund

External references

• Nippon India Mutual Fund CPSE ETF page
• DIPAM, Government of India
• NSE Indices
• NSE Indices Nifty CPSE factsheet
• SEBI
• AMFI India

References

1. Nippon India CPSE ETF scheme information document and factsheet.
2. Department of Investment and Public Asset Management (DIPAM), CPSE ETF and further fund offer notifications.
3. NSE Indices Limited, Nifty CPSE Index methodology and factsheet.
4. Finance (No. 2) Act, 2024, amendments to Sections 111A and 112A of the Income-tax Act, 1961, effective 23 July 2024.
5. AMFI monthly average AUM disclosures for ETF schemes.