CPSE ETF follow on offer

[Biker]

I have few queries with respect to upcoming CPSE ETF follow on offer.

(1) ETF is traded on exchange. So is the unit price market determined like shares or is it strictly bought/sold on NAV value?

(2) What if I want to buy/sell the ETF directly with mutual fund house? Can it be bought/redeemed like normal mutual fund units through fund house? Is there any exit load?

I dont want to buy/sell ETF units through exchange as there would other expenses like STT, brokerage and other statutory charges. Also liquidity might be an issue.

(3) There is 5% discount to new offer. So who gives this discount from their pocket? The govt? the underlying companies?

(4) If the units are sold on listing/allocation day than does it mean 5% gain (assuming the shares of underlying companies doesnt change or change minor)

Any help on this?

 

[bpr]

I have few queries with respect to upcoming CPSE ETF follow on offer.

(1) ETF is traded on exchange. So is the unit price market determined like shares or is it strictly bought/sold on NAV value?

(2) What if I want to buy/sell the ETF directly with mutual fund house? Can it be bought/redeemed like normal mutual fund units through fund house? Is there any exit load?

I dont want to buy/sell ETF units through exchange as there would other expenses like STT, brokerage and other statutory charges. Also liquidity might be an issue.

(3) There is 5% discount to new offer. So who gives this discount from their pocket? The govt? the underlying companies?

(4) If the units are sold on listing/allocation day than does it mean 5% gain (assuming the shares of underlying companies doesnt change or change minor)

Any help on this?

1) ETF trade like a stock.

2) Don't know the answer

3) given by Govt

4) as this is a known news all the stock will adjust for the 5 % discount as per their distribution in CPSE on the day of launch/the day before

 

[Biker]

The 5% discount is actually deceiving. The allotment price calculation is based on some weighted average formula. So it might happen that the allotment price (including discount) may be more than the NAV of ETF.

Any idea how to know allotment price? Any more clarifications?