The market has been revolutionised with the Bharat Bond ETF


Bharat Bond ETF

What is the Bharat Bond NFO?

The Bharat Bond ETF is a government initiated fund that combines the features of both an ETF and a bond. The AMC responsible for managing the product is Edelweiss. It’s probably the biggest NFO this year with a base size of 7,000 crore. Along with that, the unit value of will be capped at Rs 1,000.  

What are the features of the Bharat Bond ETF?

The best feature of the Bharat Bond ETF is that it combines the features of both a  bond and an ETF:

  1. Public sector: The ETF will invest only in AAA-rated bonds issued by public sector   companies maturing on or before the maturity of the ETF.

  2. Expense ratio: The expense ratio of the Bond ETF is very low at 0.0005%.

  3. Exchanged like a fund: You may buy or sell units of this fund on the stock exchange anytime during the tenure of the fund.

  4. Fixed maturity period: The bond has  a fixed maturity date – the two alternatives available are 3 years or 10 years.

  5. Returns: The returns expected are stable in nature.

  6. Tax: The Bharat Bond ETF is tax efficient compared to bonds as coupons from the bonds are taxed at marginal rates.

  7. Daily information: The daily changes will be reflected on an independent website which offers more transparency compared to debt funds.

  8. No lock-in: There is no lock-in period whatsoever related to this fund.

What is the investment strategy at play?

The investment strategy that will be followed by the Bharat Bond ETF is as follows:

  1. The fund will invest only in AAA-rated public sector undertakings (PSUs) making it one of the safest options available.

  2. There will be a fixed maturity date like that in case of bonds. There are two options available – 3 years and 10 years. That means one matures in April 2023 and the other one in April 2030.

  3. The ETF will correspond to the figures in the Nifty BHARAT bond index.

  4. The bonds will be held till maturity and coupons received will be reinvested.

  5.  Issuer weights to be capped at 15 percent at the time of rebalancing.

It’s one of the best NFOs to consider investing in currently. As Nitin Jain, the CEO of Edelweiss puts it, “this is one of the cheapest ever bond funds in the world”. Invest in it is right now as it’s closing on the 20th of December.

Don’t wait for the end moment – INVEST NOW!

Bonus info- This fund offer is also being launched for people who don’t have a Demat account.

Written by

Priyanshi Bhardwaj