The units of the ambitious Bharat Bond ETF (exchange traded fund) issued by Edelweiss Asset Management (AMC) got listed at the National Stock Exchange (NSE) on Thursday. At the time of writing of this report, both the units - BHARAT Bond ETF - April 2023 and BHARAT Bond ETF - April 2030, were trading above the issue price of Rs 1,000.
Last month, the ETF saw an oversubscription of 1.7 times, garnering Rs 12,000 crore which is likely to be utilised for capital expenditure (capex) of PSUs. The issue was open for subscription between December 12 to December 20.
The base size of the issue was Rs 7,000 crore.
The ETF will invest only in AAA-rated bonds of public sector companies and will have target maturity structures.The investors who hold these ETFs for over 3 years will get the benefit of capital gains with indexation.
The ETF will invest in constituents of the Nifty Bharat Bond Indices, consisting of public sector companies. Bharat Bond Funds of Funds (FOF) is also being launched for investors who do not have demat accounts.
In the first week of December, the Union Cabinet on Wednesday had approved the launch of India’s first bond ETF which can be bought and sold like any listed security on the bourses. The ETF — Bharat Bond ETF — will be made of AAA-rated papers issued by government-linked companies to start with, and will come in two maturities — three and 10 years, it had said. READ MORE
Debt market specialists had welcomed the move and said this will help increase the interest of retail investors in the debt market, which gives a predictable set of returns with minimum to no risk.
“A retail investor is put off by jargons such as ‘accrued interest’, ‘clean price’, ‘dirty price’, etc. To an investor, the ETF is like a mutual fund, with clear NAV structure, and is exchange traded. This is something that one can understand,” said Badrish Kulhalli, head of fixed income at HDFC Life Insurance.