CPSE ETF - FFO Presentation
CPSE ETF - FFO Presentation
CPSE ETF - FFO Presentation
Offer of Units of Rs. 10/- each (i.e. face value) for cash (on allotment, the value of each Unit would be
approximately 1/100th of the value of Nifty CPSE Index) to be issued at a premium, if any,
approximately equal to the difference between face value and FFO Allotment Price during the
Further Fund Offer (FFO) and at NAV based prices thereafter. For the existing CPSE ETF the
Ongoing Offer Period for the Scheme commenced on April 04, 2014.
Slide 1
Table of Contents
Advantages of ETF
Slide 2
Introduction to Exchange Traded Funds (ETFs)
Slide 3
Introduction to Exchange Traded Funds (ETFs)
An Exchange Traded Fund (ETF) is primarily a mutual fund scheme which is listed
and traded on a stock exchange. An ETF can invest in:
Slide 4
Development of International & Indian ETFs
Market
Slide 5
Growth of ETFs Internationally
3500 5000
4500
3000
4000
AUM $ Billion
No. of ETFs
2500 3500
3000
2000
2500
1500
2000
1000 1500
1000
500
500
0 0
Nov-
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
16
AUM* 74 105 142 212 310 416 579 806 716 1041 1313 1355 1754 2254 2643 2871 3287
No. of ETFs 94 208 283 288 334 440 719 1132 1614 1961 2473 3022 3334 3591 3966 4430 4791
Slide 6
Growth of ETFs in India
35,000 65
30,000 55
AUM (Rs. in Crores)
25,000 45
No. of ETFs
20,000 35
15,000 25
10,000 15
5,000 5
0 -5
Dec- Dec- Dec- Dec- Dec- Dec- Nov-
Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09
10* 11* 12* 13* 14* 15** 16**
AUM 7 168 568 2920 7811 7142 2671 2410 4981 10852 13380 10959 12677 17622 31118
No of ETFs 1 5 6 6 6 12 16 18 26 33 34 39 45 57 63
Slide 7
Advantages of ETF
Slide 8
Familiar ground best of both worlds
ETF
Slide 9
Why invest via an ETF?
Slide 10
Nifty CPSE Index
Slide 11
Constituents of the Nifty CPSE Index
GAIL (India)
Slide 12
About the Nifty CPSE Index
Nifty CPSE Index is constructed in order to facilitate Government of India initiative
to disinvest some of its stake in selected CPSEs (Central Public Sector
Enterprises) through the ETF route. The index values are to be calculated on free
float market capitalization methodology. The index has base date of 01-Jan-2009
and base value of 1000. Weights of index constituent shall be re-aligned (i.e.
capped at 25%) every quarter effective 2nd Monday of February, May, August and
November.
Selection Criteria: The 10 CPSEs selected meet below mentioned parameters:
Included in the list of CPSEs published by the Department of Public Enterprise
Listed at National Stock Exchange of India Ltd. (NSE)
Having more than 55% government holding (stake via Govt. of India or
President of India) under promoter category.
Companies having average free float market capitalization of more than
Rs.1000 Cr. for six month period ending June 2013 are selected.
Have paid dividend of not less than four per cent including bonus for the seven
years immediately preceding or for at least seven out of the eight or nine years
immediately preceding are considered as eligible companies as on cut-off date
i.e. 28-Jun-2013.
Slide 13
Nifty CPSE Index Vs Other Broad Indices - Valuations
Please note that the stock composition of all the indices are different
Data as 30th Dec 2016. Source : www.nseindia.com
Slide 14
CPSE ETF - Overview
Slide 15
CPSE ETF - Background
Government of India (GOI) used innovative route to divest its holding in CPSEs
via ETF
NFO received overwhelming response; NFO collection was Rs.4,363 Crs, out of
which Rs.1,363 Crs was refund to investors due to limited issue size of
Rs.3,000 Crs
Units of CPSE ETF were listed on 04th April 2014 on NSE & BSE
Slide 16
CPSE ETF Scheme Details
Investment objective
The investment objective of the Scheme is to provide returns that, before expenses, closely
correspond to the total returns of the Securities as represented by the Nifty CPSE Index, by investing
in the Securities which are constituents of the Nifty CPSE Index in the same proportion as in the Index.
However the performance of the Scheme may differ from that of underlying index due to tracking error.
There can be no assurance or guarantee that the investment objective of the Scheme would be
achieved.
Investment pattern
Indicative Allocation
Instruments (% of net assets) Risk Profile
Minimum Maximum
Securities covered by Nifty CPSE Index 95% 100% Medium to High
Money Market Instruments (with maturity not exceeding 91
0% 5% Low to Medium
days), including CBLO, cash & cash equivalents.
The above stated percentages are indicative and not absolute.
Type of scheme
An Open Ended Index Scheme, listed on the Exchanges in the form of an Exchange Traded Fund
(ETF) tracking Nifty CPSE Index
RGESS
The Scheme is in compliance with the provisions of Rajiv Gandhi Equity Savings Scheme, 2013
(RGESS)
Slide 17
CPSE ETF Performance as on Dec 30, 2016
CPSE ETF (CPSEETF)
NAV as on Dec 30, 2016: Rs 25.3145
NAV Per Unit TR: Nifty CPSE TR AB: Nifty 50
Period CPSE ETF B:Nifty CPSE Index
(Rs.) Index# Index
Dec 31, 2015 to Dec 30, 2016 21.5576 17.43 12.89 17.45 3.01
Dec 31, 2014 to Dec 31, 2015 25.1491 -14.28 -17.03 -14.48 -4.06
Dec 31, 2013 to Dec 31, 2014 -- -- -- -- --
Since Inception (March 28, 2014)
CAGR (%) 17.4504 14.42 6.26 9.28 7.55
Point to Point (INR)* 14,507 11,826 12,780 12,225
Past performance may or may not be sustained in future and the same may not necessarily provide the basis for comparison with other investment. Since
inception returns (wherever provided) is computed on Compounded Annualized Growth Returns (CAGR) basis. For Scheme(s) which has completed more than 3 years,
point to point returns for twelve month periods for last 3 years is provided basis the last day of the calendar quarter and are computed on absolute basis. In case the
scheme(s) which is in existence for more than 1 year but less than 3 years, point to point returns is provided for as many period as possible, such period being counted
from the last day of the calendar quarter and are computed on absolute basis. Dividends (if any) are assumed to be reinvested at the prevailing NAV. Bonus (if any)
declared has been adjusted. Performance of the scheme would be Net of Dividend distribution tax, if any. Face value of scheme is Rs. 10/- per unit. In case, the start/end
date of the concerned period is non-business day (NBD), the NAV of the previous date is considered for computation of returns.
For performance of other schemes managed by the fund manager please refer performance slides at the end
Slide 18
CPSE ETF Portfolio & Industry Allocation
Industry Allocation %
Transportation 5.04%
Finance 10.79%
Gas 11.17%
Minerals/Mining 20.54%
Oil 27.74%
Slide 19
CPSE ETF FFO
Slide 20
CPSE ETF FFO Investment Rationale
Play on India growth story through investment in the large CPSE stocks at
attractive valuations
Portfolio diversification through investment in blue-chip Maharatna and
Navaratna CPSE stocks which are sector leaders
FFO price advantage Upfront discount to all categories of investors
Attractive Valuation and Dividend Yields: P/E ratio and dividend yields better
compared to broader market index (Refer Index Valuation slide)
Slide 21
CPSE ETF FFO details
Scheme Features For Anchor Investors For Non Anchor Investors
FFO Opens on January 17, 2017 January 18, 2017
FFO Closes on January 17, 2017 January 20, 2017
Benchmark Index Nifty CPSE Index
Pricing 1/100th of Nifty CPSE Index
Fund Manager Payal Wadhwa Kaipunjal
Load Structure Entry & Exit Load : NA & NIL (Refer Note # 1 )
Plans Growth
FFO Units offered pursuant to the FFO, listed on NSE and BSE on or before February 10, 2017. However Units of the
Listing
existing CPSE ETF Scheme were listed on 04th April 2014 on NSE & BSE.
Maximum Amount to be Raised
Rs. 6,000 crores
during FFO (Refer Note # 4 )
Discount Offered by GOI (Refer Discount of 5 (five) % on the FFO Reference Market Price of the underlying shares of Nifty CPSE Index shall be
Note # 5 ) offered to FFO by GOI. (Refer illustration on next slide)
Slide 22
Discount offered by GOI to FFO contd
Full day VWAP on NSE Full day VWAP on NSE Full day VWAP on NSE
Non Anchor FFO Period
Stock A (Rs.) Stock B (Rs.) Stock C (Rs.)
Average of full day VWAP (Rs.) for the above period 11.2 24 52.8
Slide 23
CPSE ETF Mechanism
Cash Cash
Reliance
All Investors Government of India
Mutual Fund
Slide 24
CPSE ETF Mechanism
Seller
CPSE ETF
Cash Units
Authorized
Buy / sell
participants /
Stock Exchange
financial Market making /
institutions arbitrage
Slide 25
Notes
1. Payment of Transaction Charges For applications received during the FFO Period, the AMC/ Mutual Fund may deduct
transaction charges of 150 (Rupees One Hundred and Fifty) (for first time investors across mutual funds) or 100 (Rupees One
Hundred) (for existing investors across mutual funds) from the Subscription amount, which would be paid to the empanelled AMFI
registered Distributor / agent of the Investor (in case the empanelled AMFI registered Distributor / agent has opted in to receive
the transaction charge for this type of product) and the balance amount shall be invested in the Scheme. Please refer to Section IV
(C) (Transaction Charges) of the Supplement to SID for further details.
2. Retail Individual Investors: Individual Investors (including HUFs applying through their Kartas and NRIs) who have applied for
FFO Units for an amount not exceeding 2,00,000 (Rupees Two lakhs). Non Institutional Investor : All investors who are not
Qualified Institutional Buyers or Retail Individual Investors and who have applied for the Units for an amount more than 2,00,000
(Rupees Two Lakhs). Qualified Institutional Buyers: Qualified Institutional Buyers as defined under Regulation 2(1)(zd) of the
SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended. Anchor Investor - A Qualified Institutional
Buyers, applying under the Anchor Investor Portion, with a minimum application amount of 10 Crores (Rupees Ten Crores).
Refer to Multiple Applications by Same Investor under Section III (A) of Supplement to SID.
3. Anchor Investor Portion: The portion not exceeding 30% of the Maximum Amount to be Raised (if any) shall be available for
allocation to Anchor Investors on a proportionate basis.
In case of under Subscription in this category, the under subscribed portion will be available for spill-over from the Retail Individual
Investor Portion at the discretion of the AMC. If even after the spill-over from the Retail Individual Investor Portion, the Anchor
Investor Portion remains under subscribed, then the balance shall be met by spillover from the Qualified Institutional Buyers & Non
Institutional Investor Portion. But any under-Subscription in the Retail Individual Investor Portion and Qualified Institutional Buyers
& Non Institutional Investor Portion will not be allowed to be met by any spill-over from the Anchor Investor Portion.
Retail Individual Investor Portion: Atleast 70% of the Maximum Amount to be Raised (if any) plus any under subscribed portion
of Anchor Investor, shall be available for allocation to Retail Individual Investors on a proportionate basis in the manner set out in
the Supplement at the discretion of the AMC.
In case of under Subscription in this category, the under subscribed portion of this category as well as Anchor Investor category
will be available for allocation to Qualified Institutional Buyers & Non Institutional Investor Portion.
Slide 26
Notes
Qualified Institutional Buyers & Non Institutional Investor Portion: Upto 100% of the residuary portion available (if any) from
Maximum Amount to be Raised (if any) following any under-subscription of the Retail Individual Investor Portion (which includes any
under-subscription of the Anchor Investor Portion) shall be available for allocation to Qualified Institutional Buyers and Non
Institutional Investors on a proportionate basis in the manner set out in the Supplement.
Allocation will be made to this category only to the extent of any under subscription in the Retail Individual Investor Portion which
would also include any under subscription of Anchor Investor portion. If Retail Individual Investor Portion is oversubscribed, then no
allocation will be made to Qualified Institutional Buyers and Non Institutional Investors.
Under this category, the allocation will be first made to provident funds / superannuation funds / gratuity funds / pension funds who
have applied under QIBs on a proportionate basis in the manner set out in the Supplement at the discretion of the AMC & residuary
portion available (if any) post allocation to provident funds / superannuation funds / gratuity funds / pension funds will be available
for allocation to Qualified Institutional Buyers (other than provident funds / superannuation funds / gratuity funds / pension funds)
and Non Institutional Investors on a proportionate basis in the manner set out in the Supplement at the discretion of the AMC.
6. FFO Units will rank pari-passu to the existing Units of the CPSE ETF.
Slide 27
Performance Other Schemes Managed by Fund Manager
Slide 28
Performance Other Schemes Managed by Fund Manager contd.
Slide 29
Performance Other Schemes Managed by Fund Manager contd.
Common Disclaimer :
*Based on current value of standard investment of Rs. 10,000 made at inception.
Past performance may or may not be sustained in future and the same may not necessarily provide the basis for comparison with other investment. Since inception
returns (wherever provided) is computed on Compounded Annualized Growth Returns (CAGR) basis. For Scheme(s) which has completed more than 3 years, point to
point returns for twelve month periods for last 3 years is provided basis the last day of the calendar quarter and are computed on absolute basis. In case the scheme(s)
which is in existence for more than 1 year but less than 3 years, point to point returns is provided for as many period as possible, such period being counted from the
last day of the calendar quarter and are computed on absolute basis. Dividends (if any) are assumed to be reinvested at the prevailing NAV. Bonus (if any) declared has
been adjusted. Performance of the scheme would be Net of Dividend distribution tax, if any. Face value of scheme is Rs. 10/- per unit. Face value of R*Shares Junior
BeES is Rs. 1.25 per unit. Face value of R*Shares Gold BeES is Rs.100 per unit. In case, the start/end date of the concerned period is non-business day (NBD), the
NAV of the previous date is considered for computation of returns. B: Benchmark, AB: Additional Benchmark,
#TR Index - Total Returns Index reflects the returns on the index arising from (a) constituent stock price movements and (b) dividend receipts from constituent index
stocks, thereby showing a true picture of returns.
Slide 30
Product Label Other Schemes Managed by Fund Manager
Slide 31
Disclaimers
Scheme Specific Risk Factors: Risk relating to CPSE Securities - Since the CPSE companies are substantially owned by the GOI, the
GOI may take actions with respect to the CPSE sector that may not be in the best interests of Unit holders. There can be no assurance
that such incidents would not result in a fall in price of the underlying securities constituting the Nifty CPSE Index and correspondingly the
NAV of the Scheme. Further trading volumes and settlement periods may restrict liquidity in equity and debt investments. Investment in
Debt is subject to price, credit, and interest rate risk. The NAV of the Scheme may be affected, inter alia, by changes in the market
conditions, interest rates, trading volumes, settlement periods and transfer procedures. The NAV may also be subjected to risk associated
with tracking error, investment in derivatives or script lending as may be permissible by the Scheme Information Document (SID). For
further details please refer SID
BSE Disclaimer: It is to be distinctly understood that the permission given by BSE Ltd. should not in any ways be deemed or construed
that the SID has been cleared or approved by BSE Ltd. nor does it certify the correctness or completeness of any of the contents of the
SID. The investors are advised to refer to the SID for the full text of the Disclaimer clause of the BSE Ltd.
NSE Disclaimer: It is to be distinctly understood that the permission given by NSE should not in any way be deemed or construed that
the SID has been cleared or approved by NSE nor does it certify the correctness or completeness of any of the contents of the SID. The
investors are advised to refer to the SID for the full text of the Disclaimer Clause of NSE
Slide 32
Disclaimers
Disclaimers
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and
therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. Certain factual and
statistical information (historical as well as projected) pertaining to Industry and markets have been obtained from independent third-
party sources, which are deemed to be reliable. It may be noted that since RNLAM has not independently verified the accuracy or
authenticity of such information or data, or for that matter the reasonableness of the assumptions upon which such data and
information has been processed or arrived at; RNLAM does not in any manner assures the accuracy or authenticity of such data and
information. Some of the statements & assertions contained in these materials may reflect RNLAMs views or opinions, which in turn
may have been formed on the basis of such data or information.
Before making any investments, the readers are advised to seek independent professional advice, verify the contents in order to
arrive at an informed investment decision. None of the Sponsor, the Investment Manager, the Trustee, their respective directors,
employees, affiliates or representatives shall be liable in any way for any direct, indirect, special, incidental, consequential, punitive
or exemplary damages, including on account of lost profits arising from the information contained in this material.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
Slide 33
Thank you