Best PSU-Focused Mutual Funds and ETFs to Invest in 2026
- July 15, 2026
- Posted by: Harsh Piplani
- Category: News
CPSE ETF NAV Rs 95.91, 5-year annualised return 29.76%. Bharat 22 ETF NAV Rs 120.25, AUM Rs 10,786.89 Cr, 1-year return 10.09%.
CPSE ETF and Bharat 22 ETF are among the best PSU-focused mutual funds and ETFs to invest in 2026, offering investors diversified exposure to India’s public sector companies through a single, passively managed investment rather than picking individual PSU stocks.
For investors seeking broad PSU sector exposure without the effort of researching and selecting individual stocks, best PSU-focused mutual funds and ETFs to invest in 2026 provide a diversified, professionally constructed basket that tracks established PSU indices.
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This article examines CPSE ETF and Bharat 22 ETF as best PSU-focused mutual funds and ETFs to invest in 2026, covering their portfolio composition and the risks of passive PSU sector investing.
What Makes a Fund a Best PSU-Focused Pick for 2026
Best PSU-focused mutual funds and ETFs to invest in 2026 are passively managed funds that track established PSU indices, providing diversified exposure across multiple government-owned companies rather than concentrating risk in a single stock.
These funds typically differ in their specific index construction, sector weighting and inclusion criteria, making it important to understand each fund’s underlying methodology before selecting between available options.
Why These Funds Rank Among the Best PSU-Focused Options for 2026
CPSE ETF’s low-cost, energy-heavy PSU exposure and Bharat 22 ETF’s broader six-sector diversification both illustrate why these are frequently cited as best PSU-focused mutual funds and ETFs to invest in 2026 for different investor preferences.
- CPSE ETF’s low-cost passive structure: Among best PSU-focused mutual funds and ETFs to invest in 2026, CPSE ETF invests at least 80 percent of assets in PSU companies.
- Bharat 22 ETF’s broader diversification: Bharat 22 ETF spans six sectors and 22 companies, including select private sector names like L&T alongside core PSUs.
- Strong historical returns track record: CPSE ETF has delivered a 5-year annualised return of 29.76 percent, reflecting the broader PSU sector re-rating.
- Government disinvestment mechanism origin: Both ETFs originated as government disinvestment vehicles, bundling PSU stake sales into structured, tradeable products.
| Fund | NAV (Rs) | 5-Year Return | Focus |
|---|---|---|---|
| CPSE ETF | 95.91 | 29.76% (annualised) | Energy, oil and gas-heavy PSU basket |
| Bharat 22 ETF | 120.25 | 25.18% | Diversified 6-sector, 22-company basket |
CPSE ETF: Concentrated PSU Exposure With Strong Returns
CPSE ETF is among the best PSU-focused mutual funds and ETFs to invest in 2026, tracking the Nifty CPSE Index with a mandate to invest at least 80 percent of assets in PSU companies, delivering a 5-year annualised return of 29.76 percent as of July 2026.
The fund’s concentration in energy, oil and gas-heavy PSUs means its performance closely tracks these specific sub-sectors, making it a more focused rather than fully diversified PSU exposure option for investors.
Bharat 22 ETF: Broader Six-Sector Diversification
Bharat 22 ETF rounds out the best PSU-focused mutual funds and ETFs to invest in 2026, spanning basic materials, energy, finance, FMCG, industrials and utilities across 22 companies, with an AUM of Rs 10,786.89 crore and a low expense ratio of 0.05 percent.
The fund’s inclusion of select private sector holdings like L&T, ITC and Axis Bank alongside core PSUs like SBI, Power Grid, NTPC and ONGC provides broader diversification than a purely PSU-only fund, appealing to investors wanting a more balanced sector exposure.
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Download the Univest iOS App or Univest Android App to track CPSE ETF and Bharat 22 ETF live prices.
Factors Affecting Best PSU-Focused Mutual Funds and ETFs to Invest in 2026
- Expense ratio comparison: Lower expense ratios directly improve net returns for passively managed PSU index funds over time.
- Underlying index composition: Each fund’s specific index construction affects sector concentration and diversification levels.
- Tracking error: The fund’s ability to closely replicate its benchmark index affects how faithfully it captures the PSU sector’s performance.
- Liquidity for ETF units: Trading volume for the ETF units affects ease of entry and exit for investors.
- Government disinvestment schedule: Since these ETFs originated from disinvestment, future government stake sale plans could affect fund composition.
Benefits of Best PSU-Focused Mutual Funds and ETFs to Invest in 2026
- Instant diversification: Best PSU-focused mutual funds and ETFs to invest in 2026 provide exposure to multiple PSU companies through one investment.
- Low-cost passive management: Both funds carry low expense ratios compared to actively managed alternatives.
- Professional index construction: Established index methodologies provide a structured, rules-based approach to PSU sector exposure.
- Historical return track record: Both funds have delivered strong historical returns, reflecting the broader PSU sector re-rating since 2022.
- Simplified PSU sector access: Investors gain PSU exposure without needing to research and select individual companies themselves.
Risks of Best PSU-Focused Mutual Funds and ETFs to Invest in 2026
- Sector concentration risk: Best PSU-focused mutual funds and ETFs to invest in 2026 carry inherent PSU sector concentration risk despite internal diversification.
- Government policy dependence: Fund performance remains tied to broader government PSU policy and disinvestment decisions.
- Tracking error risk: Actual fund returns can deviate somewhat from the underlying index due to tracking error.
- No active management adjustment: Passive funds cannot adjust holdings in response to company-specific concerns, unlike actively managed alternatives.
- Past returns not indicative of future performance: Strong historical returns do not guarantee similar performance continues going forward.
How to Choose Among Best PSU-Focused Mutual Funds and ETFs to Invest in 2026
- When picking among best PSU-focused mutual funds and ETFs to invest in 2026, compare expense ratios and their long-term impact.
- Assess whether you prefer CPSE ETF’s more concentrated energy-heavy exposure or Bharat 22 ETF’s broader diversification.
- Review each fund’s specific index methodology and sector weighting before investing.
- Consider liquidity and trading volume for the specific ETF units you plan to purchase.
- Evaluate historical returns in context, recognising that past performance does not guarantee future results.
How to Invest in Best PSU-Focused Mutual Funds and ETFs to Invest in 2026
- Use the Univest platform to research fund composition and historical performance for these ETFs.
- Open a demat and trading account with Univest for zero-brokerage execution.
- Track NAV and performance for CPSE ETF and Bharat 22 ETF through the Univest app.
- Consult a SEBI-registered advisor before allocating capital to PSU-focused index funds.
- Review your fund allocation periodically as PSU sector performance and government policy evolve.
Conclusion
CPSE ETF and Bharat 22 ETF represent some of the best PSU-focused mutual funds and ETFs to invest in 2026, offering diversified exposure to India’s public sector companies through low-cost, passively managed structures. Historically, both funds have delivered strong returns reflecting the broader PSU sector re-rating, though sector concentration risk and government policy dependence remain important ongoing considerations. Consult a SEBI-registered advisor before making investment decisions.
Disclaimer: Data and figures in this article are sourced from publicly available information. These may or may not be accurate. Please verify all data with the official NSE (nseindia.com) and BSE (bseindia.com) websites before making any investment decision. Investments in securities are subject to market risk. This content is for educational purposes only and is not investment advice by Univest (SEBI RA INH000013776).
FAQs
Which are the best PSU-focused mutual funds and ETFs to invest in 2026?
Ans. CPSE ETF and Bharat 22 ETF are among the best PSU-focused mutual funds and ETFs to invest in 2026, offering diversified passive PSU sector exposure.
What is CPSE ETF’s historical return?
Ans. CPSE ETF, among the best PSU-focused mutual funds and ETFs to invest in 2026, has delivered a 5-year annualised return of 29.76 percent as of July 2026.
How is Bharat 22 ETF different from CPSE ETF?
Ans. Bharat 22 ETF, one of the best PSU-focused mutual funds and ETFs to invest in 2026, spans six sectors and includes select private companies, while CPSE ETF focuses more heavily on energy-linked PSUs.
What is Bharat 22 ETF’s AUM?
Ans. Bharat 22 ETF, among the best PSU-focused mutual funds and ETFs to invest in 2026, has an AUM of Rs 10,786.89 crore with an expense ratio of 0.05 percent.
Are these PSU ETFs suitable for all investors?
Ans. Best PSU-focused mutual funds and ETFs to invest in 2026 carry sector concentration risk and are best suited for investors comfortable with PSU-specific exposure as part of a diversified portfolio.
What risks apply to PSU-focused mutual funds and ETFs?
Ans. Key risks include sector concentration risk, government policy dependence, tracking error, and the fact that past returns do not guarantee future performance.
