Govt plans global ETF to tap investment from large overseas pension funds

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New Delhi, Oct 28: The Finance Ministry is planning to launch a global exchange traded fund (ETF) with a view to attracting long-term investment from overseas large pension fund houses.
The new ETF, which will be constituted after studying the appetite of large investors, is being planned for launch in the next financial year, an official said.
Initially, the ministry was planning to list Bharat-22 ETF in the overseas market but decided not to go ahead with it as investors expressed apprehensions over the cost associated with hedging and currency conversion.
“The target is to tap the untapped investors, which is the large overseas pension funds. A new ETF is being thought of which will be constituted based on the sectors for which these investors show their interest,” the official said.
The official further said that the CPSEs in which there is substantial scope for further dilution of government equity, like where promoter holding is above 58-60 per cent, will be included in the proposed ETF for global listing.
The government has listed two exchange-traded funds — CPSE ETF and Bharat-22 ETF– on the domestic stock exchanges. ETFs function like a mutual fund scheme and have underlying assets of government-owned companies.
The government has already raised Rs 229 billion through two tranches of Bharat-22 ETF and Rs 115 billion through three tranches of CPSE ETF.