Summary:
If you have heard the term CPSE ETF and wondered what it actually means, here is a simple breakdown. CPSE stands for Central Public Sector Enterprise Exchange Traded Fund. The Government of India launched it as a way to sell its stake in selected government-owned companies to the public in an organised manner.
The fund first came into existence in March 2014. It was introduced by the Department of Disinvestment, which today goes by the name Department of Investment and Public Asset Management, or DIPAM. Since then, the government has come back multiple times with new offerings, each time offloading a portion of its holding in these companies to investors.
The fund holds shares of 10 government-owned companies. These include ONGC, Coal India, IOC, GAIL India, Oil India, PFC, Bharat Electronics, REC, Engineers India, and Container Corporation of India. The sectors it covers are power, oil, gas, capital goods, and construction.
Not every government company makes the list. To be included, a company must be listed on a stock exchange, have majority government ownership, meet a minimum market size requirement, and have a consistent track record of paying dividends.
The CPSE ETF does not decide on its own which stocks to buy or sell. It simply mirrors a benchmark called the Nifty CPSE Index, which is built and managed by NSE Indices Limited.
The fund is passively managed, meaning it buys the same stocks as the index and holds them in the same proportion. So if NTPC has a 20% weight in the Nifty CPSE Index and Power Grid has 19%, the ETF puts 20% of your money into NTPC and 19% into Power Grid. The fund manager, currently Nippon India Mutual Fund, just makes sure the portfolio stays in line with the index at all times.
Because of this structure, the fund's NAV moves directly with the combined performance of these public sector companies. You can buy and sell units on NSE and BSE through your demat account, just like you would buy a stock.
The Nifty CPSE Index uses free-float market capitalisation to calculate its value. The formula divides the current index market capitalisation by the base free-float market capitalisation, multiplied by the base index value. The base date for the index is January 1, 2009, with a starting value of 1000. Every movement in the index today is measured against how those same companies were valued back in 2009.
The index is reviewed and rebalanced every quarter. Changes take effect on the last trading day of March, June, September, and December. During each rebalancing, the weight of any single company is capped at 20%. If a stock rises sharply between two rebalancing dates and its weight crosses that limit, it gets trimmed back at the next quarterly review.
Any change to the index, whether a company is added, removed, or has its weight adjusted, happens only after a formal request from the ETF's fund house to the Ministry of Disinvestment. Nothing changes without that approval.
Unlike a regular mutual fund where you get the NAV only at the end of the trading day, the CPSE ETF is priced live during market hours. The moment you place a buy order through your demat account, units get credited to you just like shares of any company.
Around 74% of the fund's portfolio sits in energy-related stocks. That makes it heavily dependent on commodity prices and government decisions around the energy sector. If oil prices move sharply or if the government changes its policy on privatisation, the fund can see meaningful swings.
It also has sector concentration risk, meaning it does not spread your money evenly across the entire economy. It works best as part of a larger portfolio and suits investors who are comfortable holding PSU stocks over a longer period.
The CPSE ETF is a straightforward, low-cost way to invest across a basket of India's leading public sector companies without picking individual stocks. Its performance tracks the Nifty CPSE Index closely, so there is no guesswork involved. That said, its heavy exposure to energy and its dependence on government policy mean it comes with its own set of risks. It is most suitable for long-term investors who want PSU exposure as part of a well-diversified portfolio.
References:
https://www.angelone.in/knowledge-center/mutual-funds/what-is-cpse-etf
https://www.5paisa.com/blog/what-is-cpse-etf-how-it-tracks-psu-companies
https://www.angelone.in/knowledge-center/mutual-funds/what-is-cpse-etf
https://www.policybazaar.com/mutual-funds/nippon-india-mutual-fund/cpse-etf-growth/
NRI Tax on Gold ETF Gains in India: Updated Rules, Dates & Practical Guidance
4 min Read Jan 16, 2026
Oil Crisis 2026: How the Iran-US War Pushed Crude to $150
3 min Read Apr 21, 2026
Oil and Gas Cools Off, Power and Renewables Step Into the Spotlight
3 min Read Apr 21, 2026
Tracking Error: What It Really Tells You About Your Index Fund
3 min Read Apr 21, 2026
Indian AI Stocks: Why These Companies Are Leading Or Lagging In 2026
3 min Read Apr 21, 2026
50% returns in select funds: skill or market cycle
3 min Read Apr 21, 2026
For android only
