How does a retail investor benefit from corporate actions within an ETF?

I have investments in CPSE ETF. When the companies within the ETF declare dividends or buyback shares, how does a retail investor gets benefited?
- Rama Prasad

The CPSE ETF is based on an index comprising of 10 public sector companies. Whenever a company declares dividend it gets reflected in its NAV. An ETF on the basis of its NAV, reflects the market's demand and supply and then gets traded on the stock exchange.

If an ETF participates in the buyback of shares, then the composition of the index changes.

The benefit of this is received by the fund which then impacts its NAV and in turn gets reflected in the market price. So the investor receives the benefits in terms of the reflected NAV.

This article was originally published on March 12, 2019.