Bharat 22 ETF: Overview.
The ‘Bharat 22‘ Exchange Traded Fund (ETF), comprising 22 scrips of public sector units, is open for retail investors from November 15 to November 17. The state-owned companies or PSUs that are part of the new ETF are ONGC, IOC, SBI, BPCL, Coal India and Nalco.
The other Central Public Sector Enterprises on the list are Bharat Electronics, Engineers India, NBCC, NTPC, NHPC, SJVNL, GAIL, PGCIL and NLC India. It also includes government’s strategic holding in Axis Bank, ITC and L&T held through SUUTI (Specified Undertaking of Unit Trust of India).
About Exchange Traded Funds (ETFs):
Exchange Traded Funds are defined as marketable securities that track a specific commodity, bonds, index or a combination of assets such as index fund. ETFs can be traded on stock markets similar to shares thus ETF units witness price change in real time.
Features of the Bharat 22 ETF:
Large Cap Orientation: The 22 company securities held by the Bharat 22 ETF would feature some of the largest companies listed in NSE.
Real-time Investment/Redemption: As the ETF will be traded on the stock market, it allows investors to buy or sell in real time.
Low Expense Ratio: The Bharat 22 ETF is expected to feature a lower expense ratio as compared to actively managed mutual funds.
Discount: An upfront discount of 3% would be offered to initial investors.
Taxation: ETF investments are subject to short term capital gains and long term capital gains.
Price: The Net Asset Value (NAV) is yet to be announced.
Should I Invest?:
The ETF is well diversified with investments across six core sectors — basic materials, energy, finance, FMCG, industrial and utilities and it offers an attractive long-term investment opportunity to partake in the India growth story. But considering the markets at all-time highs, it is better to invest at better valuations when the markets correct.