Bharat Bond ETF | Details & How To Invest in Bharat Bond ETF

Government of india recently took an initiative and launched Bharat Bond ETF.

Today we are going to see all the details of the bharat bond ETF and how to invest in it.

So let’s get started…

What Is Bharat Bond ETF

First of All What Is ETF?

Etf is exchange-traded funds. These ETFs are traded on stock exchanges like NSE and BSE just like stocks. ETFs are almost like mutual funds.

Little confused? let me explain. ETFs invests your money in a basket of stocks just like mutual funds but unlike mutual funds, you can trade ETFs on stock exchanges. In simple words, you can call that ETF is a baby of mutual fund and stock.

Bharat bond ETF is a debt ETF fund. It is an initiative by the government of India. It is open-ended and tracks the returns provided by the Nifty Bharat Bond Index.

Bharat bond ETF invests your money in “AAA” rated public sector bonds(for example, IRFC, NABARD, NHAI, NHPC, NTPC, REC, PFC, power grid corp, and SIDBI).

• Bharat Bond ETF Has a Fixed Maturity Period.
• It Follows the Nifty Bharat Bond ETF Index.
• It Invests in High Quality “AAA” Rated Bonds of Public Sector Companies.
• It Holds the Bonds till Their Maturity and Reinvests the Coupons Received.
• It Invests 5% of Its Allocation towards G-SEC/TREPS to Manage Liquidity.

Bharat Bond ETF is Managed by Edelweiss Asset Management Limited.

Comparison with Other Debt Funds and Bonds

Journey of BHARAT Bond ETF

Why Invest in BHARAT Bond ETF?

Advantages 👍🏻 :

• Higher Safety: As the Investment Is Done in ‘AAA’ Rated Public Sector Bonds, Risk Is Very Low.
• Low Cost: Management Fees of Bharat Bond ETF Is 0.0005% per Annum.
• No Lock-In: ETFs Are Listed in Stock Exchanges so You Can Buy and Sell Them Anytime.
• Diversification: This ETF invests in Many Bonds so if any company defaults, the Risk of Losing Investment is very low.
• Stability and Predictability: A Bond-like Structure with Fixed Maturity Provides Predictable and Stable Returns at Maturity
• Transparency: Daily Disclosure of Portfolio Constituents and Live Nav Periodically through the Day
• Taxation:
  • If You Hold This Bond for More than 3 Years Then the Ltcg Tax Will Be Applicable (20%) on Profit but You Will Get Indexation Benefit.
  • If You Hold This Bond for Less than 3 Years Then Stcg Tax Will Be Applicable as per Your Incom Tax Slab.

Disadvantages 👎🏻 :

• Unlike Mutual Funds, to Buy Bharat Bond ETF You Will Need a Demat Account.
• Liquidity Risk: If You Want to Sell Your Bonds on Stock Exchanges There Can Be Some Liquidity Problems.

How It Works

Bharat Bond ETF Details

Name of the scheme	Bharat Bond ETF
Name of the Trustee Company	Edelweiss Trusteeship Company Limited
Type of Fund	Open-Ended Target Maturity Exchange Traded Bond Fund That Seeks to Track the Returns Provided by Nifty Bharat Bond Index
Investment Objective	To Replicate the Nifty Bharat Bond Index by Investing in Bonds of CPSEs/CPSUs/CPFIs and Other Government Organizations, Subject to Tracking Errors
Performance of the Scheme	The Scheme Is a New Scheme and Does Not Have Any Performance Track Record.
Minimum Target amount	The Minimum Target Amount to Be Raised during the NFO Period Shall Be ₹20 Crores.
Face Value	₹1000
Expense Ratio	Maximum 0.0005% P.A. Of Daily Net Assets
Exit Load for ETF	Nil
Listing	Units Will Be Listed on Nse & Bse within 5 Business Days from the Date of Allotment
Minimum Amount for Application in the NFO	Anchor Investors: Anchor Investors Can Invest with the Minimum Application Amount of ₹10,00,00,000 (Rupees Ten Crores Only) and in Multiples of ₹1000 Thereafter. Retail Individual Investors: Investors in This Category Can Invest with the Minimum Investment Amount of ₹1000 and in Multiples of ₹1000 Thereafter, Subject to the Maximum Investment Amount of ₹2,00,000(Rupees Two Lakhs Only). Retirement Funds: Investors in This Category Can Invest with a Minimum Investment Amount of ₹201,000 (Rupees Two Lakhs and One Thousand Only) and in Multiples of ₹1000 Thereafter. QIBs: Investors in This Category Can Invest with a Minimum Investment Amount of ₹201,000 (Rupees Two Lakhs and One Thousand Only) and in Multiples of ₹1000 Thereafter. Non-Institutional Investors: Investors in This Category Can Invest with a Minimum Investment Amount of ₹201,000 (Rupees Two Lakhs and One Thousand Only) and in Multiples of ₹1000 Thereafter.
Riskometer	Moderate
Plans	Growth
Fund Manager	Mr Dhawal Dalal (Managing the Scheme Since Inception) Mr Gautam Kaul (Managing the Scheme Since Inception)

Bharat Bond ETF Returns

There are ‘no’ assured returns. During the investment period, the value of investments can go up or down depending on market conditions and are dependent on interest rates movements in the economy.

However, if you stay invested till the maturity of the etf then the return can be in line with the yield of the portfolio at the time of investments.

Comparison of Bharat Bond ETF Vs Other Debt Products

How to Invest in Bharat Bond ETF

We can invest in Bharat bond ETF via 3 methods.

1. NFO(New Fund Offer) – Minimum Investment – ₹ 1000
   • We Can Invest in the Bharat Bond through the NFO Period. Around 25% of the Subscription Is Reserved for Retail Investors and the Rest 75% Is Reserved for Other Categories of Investors.
2. From Stock Exchanges (NSE)
   • If the NFO Period Is over, We Can Buy and Sell Them during Market Hours. For This, We Will Need a Demat Account.
3. FOF(Fund of Funds) – No Demat Account Required
   • In Case You Don’t Have a Demat Account, You Can Invest in Bharat Bond FOF (Fund of Funds).

I’ll add step by step guide when the next NFO will be open for investment. Stay tuned.

Conclusion:

Okay okay, om, I understood everything but just tell me, should I invest in Bharat bond ETF or not?

In my opinion, if you want to diversify your portfolio and planning to invest in a bond then you should definitely invest in this bond.

Otherwise, it’s not recommended as you can get better returns in other investments like Index Funds.

Note: Mutual Fund Investments Are Subject To Market Risk, Please Read All Scheme Related Documents Carefully Before Investing.

FAQs:

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