Govt ETFs seen stoking arbitrage play, investors redeem 75% of issued units

Shrinking asset base suggests only a few investors come for the long haul

ETF| Illustration: binay sinha
Illustration: Binay Sinha

While exchange traded funds (ETFs) have proved to be successful avenues for disinvestments, they are feared to be used as arbitrage vehicles by investors. So far, the government has mobilised Rs 343 billion through the route by introducing the CPSE and Bharat-22 ETFs. In other words, it has issued units worth Rs 343 billion during the new and follow-on fund offerings (NFOs and FFOs). However, at the end of last month, nearly 75 per cent of the units were redeemed by investors.  Currently, assets under management (AUM) for the CPSE ETF stand at Rs 38 billion, as against Rs 115 ...