personal finance

DIPAM mulling lock-in period for ETFs


Department of Investment and Public Asset Management (DIPAM), the government agency looking after disinvestment plans of the central government, is discussing minimum lock-in period for future exchange traded funds (ETFs), sources told ET NOW.

DIPAM, however, is concerned if a minimum lock in period for ETFs is made mandatory, foreign investors may avoid them.

Currently, ETFs are open-ended and one can buy or sell them through exchanges just like any other stock.

Value of public sector undertakings (PSUs) have dwindled due to heavy discounts offered via ETFs, of which they are constituents. Long-term domestic retail investors have been worried over the diminishing value.

DIPAM, hence, will be seeking views of market participants for having a lock-in period for ETFs.

In FY18-19, DIPAM raised over Rs 28,000 crore via two ETFs — Bharat 22 and CPSE. In the ongoing fiscal year, the agency has raised Rs 10,000 crore via CPSE ETF.

Sources said that DIPAM will launch fourth tranche of Bharat-22 ETF on October 3, which will help garner up to Rs 8,000 crore from investors.

The issue will open for anchor investors on October 3 and for other institutional and retail investors, the next day.

The investors would get a 3 per cent discount over the issue price.





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