Bharat-22 ETF NFO Review – Should you invest?
Finally, Bharat-22 ETF New Fund Offer (NFO) would open for subscription on 14th November, 2017 for Anchor Investors. For Retail investors, Bharat-22 ETF would open for subscription on 15th November, 2017. Bharat-22 Exchange Traded Fund (ETF) consists of 22 blue chip stocks including public sector companies where Govt of India has minority stake. Bharat-22 ETF is the second ETF from Govt. of India after CPSE ETF, hence it is attracting investors in the stock market. What is Bharat-22 ETF? What stocks are part of Bharat-22 ETF? How to subscribe to Bharat-22 ETF Index? Should you invest in Bharat-22 ETF NFO or not?
Also Read: Top 10 Mutual Funds to invest in India in 2017-2018
What is Exchange Traded Fund (ETF)?
In simple terms, ETF is an exchange-traded fund (ETF) which comprises of specific stocks. If stock prices go up or down, ETF NAV would also fluctuates. It simply reflects the underlying stocks of the ETF.
What is Bharat-22 ETF Index?
Govt of India has decided for Rs 72,500 Crores divestment in its budget for FY2018. As part of this, it would divest Rs 8,700 Crores through Bharat-22 Exchange Traded Fund. Bharat-22 ETF is where 22 public sector companies are part of this Index. ICICI Pru AMC would be the ETF Manager for Bharat 22 ETF Index. Bharat 22 ETF New Fund Offer (NFO) is being launched now as part of the plan.
Features of Bharat-22 ETF NFO
Bharat-22 ETF Index consists of diversified portfolio of 22 Blue Chip Stocks.
This ETF consists of state owned companies like ONGC, IOC, SBI etc.
This ETF also consists of companies where Govt of India includes partial stakes like Axis Bank, ITC, Larsen and Toubro etc.,
This ETF also consists of blue chip stocks owned by Govt. of India through its holdings through Specified Undertakings of the Unit Trust of India (SUUTI).
Bharat-22 ETF would get listed on BSE / NSE.
This ETF NAV would go up or down based on the share prices of 22 underlying stocks under this ETF.
Who would manage Bharat-22 ETF?
Ministry of Finance has appointed ICICI Prudential AMC as ETF Manager for this fund. Asia Index Private Limited would be the index provider.
Bharat -22 ETF – What sectors are part of this ETF?
Bharat-22 ETF consists of Energy, Financial Sector, FMGC Sector, Industrial segment and Utilities segment.
Which stocks are part of Bharat-22 ETF Index?
Bharat ETF would span across 6 sectors and consists of 22 stocks. This ETF cannot invest more than 20% in single sector. Also this ETF cannot invest more than 15% in one particular stock. Bharat 22 ETF Index consists of the following stocks along with the weightage.
1) Basic Materials segment – Total of 4.4%
National Aluminium Co Ltd (NALCO) – 4.4%
2) Energy Segment – Total of 17.5%
Oil & Natural Gas Corp Ltd (energy) – 5.3%
Indian Oil Corp Ltd (energy) – 4.4%
Bharat Petroleum Corp Ltd (energy) – 4.4%
Coal India Ltd (energy) – 3.3%
3) Banking and Financial Segment – Total of 20.3%
State Bank of India (finance) – 8.6%
Axis Bank Ltd (finance) – 7.7%
Bank of Baroda( finance) – 1.4%
Rural Electrification Corp Ltd (finance) – 1.3%
Power Finance Corp Ltd (finance) – 1%
Indian Bank (finance) – 0.2%
4) FMCG Segment – Total of 15.2%
ITC Ltd (FMCG) – 15.2%
5) Industrial Segment – (Total of 22.6%)
Larsen & Toubro Ltd (Industrials) – 17.1%
Bharat Electronics Ltd (Industrials) -3.3%
Engineers India Ltd (Industrials) – 1.5%
NBCC (India) Ltd (Industrials) – 0.6%
6) Utilities Segment – Total of 20%
Power Grid Corp of India Ltd (utilities) – 7.9%
NTPC Ltd (utilities) – 6.7%
Gail India Ltd (utilities) – 3.7%
NHPC Ltd (utilities) – 1.2%
NLC India Ltd (utilities) – 0.3%
SJVN Ltd (utilities) – 0.2%
Reasons to invest in Bharat-22 ETF NFO
Bharat 22 ETF consists of 22 public sector companies where govt of India has minority of stake. This is good investment plan if someone want to invest in high future growth potential companies. This scheme provides greater diversity of investments.
All Investors would get 3% discount on the NAV.
Also Read: Khadim India IPO Issue Price is reasonably priced – Should you invest?
Reasons not to invest in Bharat-22 ETF
BHARAT 22 ETF is only the name of the Scheme and does not in any manner indicate either the quality of the Scheme or its future prospects and returns.
As the price/value/interest rates of the securities in which the Scheme invests fluctuates, the value of your investements in the Scheme may go up or down. The Sponsors are not responsible or liable for any loss resulting from the operation of the Scheme beyond the contribution of an amount of Rs. 22.2 lakhs collectively made by them towards setting up the Fund and such other accretions and additions to the corpus set up by the Sponsors.
BHARAT 22 ETF is an Exchange Traded Fund (ETF). There can be no assurance that an active secondary market will develop or be maintained.
Mutual Funds and securities investments are subject to market risks and there is no assurance or guarantee that the objectives of the Scheme will be achieved.
The NAV of the Scheme may be affected by changes in the general level of interest rates and trading volumes.
The NAV of the Scheme may be affected by settlement periods and transfer procedures.
In the event of receipt of inordinately large number of redemption requests or of a restructuring of the Scheme‟s portfolios, there may be delays in the redemption of Units.
The Liquidity of the Scheme‟s investments is inherently restricted by trading volumes.
Investors in the Scheme are not being offered any guaranteed returns.
Mutual funds being vehicles of securities investments are subject to market and other risks and there can be no guarantee against loss resulting from investing in the Scheme. The various factors which impact the value of the Scheme‟s investments include, but are not limited to, fluctuations in interest rates, prevailing political and economic environment, changes in government policy, factors specific to the issuer of the securities, tax laws, liquidity of the underlying instruments, settlement periods, trading volumes etc.
The past performance of the mutual funds managed by the Sponsors and their affiliates/associates is not indicative of the future performance of the Scheme.
Investment decisions made by the AMC may not always be profitable.
From time to time and subject to the Regulations, the Sponsors, the Mutual Funds and investment companies managed by them, their affiliates, their associate companies, subsidiaries of the Sponsors, and the AMC may invest either directly or indirectly in any or all the Schemes. The funds managed by these affiliates, associates, the Sponsors, subsidiaries of the Sponsors and /or the AMC may acquire a substantial portion of the Scheme‟s Units and collectively constitute a major investor in the Scheme. Accordingly, redemption of Units held by such funds, affiliates/associates and Sponsors might have an adverse impact on the Units of the Scheme because the timing of such redemption may impact the ability of other Unit holders to redeem their Units.
Further, as per the Regulation, in case the AMC invests in any of the Schemes managed by it, it shall not be entitled to charge any fees on such investments.
NSE CPSE Vs Bharat 22 ETF Index – What are the major variances?
Currently there is already NSE CPSE ETF which consists of major public sector enterprises. Lets see how Bharat 22 ETF Scores high compared to NSE CPSE ETF.
1) Number of Stocks: NSE CPSE ETF consists of 10 stocks. However, Bharat 22 ETF consists of 22 stocks across 6 sectors, hence provide more diversification.
2) Top 3 Stocks: NSE CPSE ETF has top 3 stocks which consists of 70% of its portfolio. However, Bharat 22 ETF has top 3 stocks to be tune of only 41%. Means it does not depend too much on just 3 stocks.
3) Top 5 Stocks: NSE CPSE ETF has top 5 stocks which consists of 83.5% of its portfolio. However, Bharat 22 ETF has top 5 stocks to be tune of only 56.5%. More diversification gives more scope for higher returns.
Also Read: Best Sector Based Mutual Funds to invest now
How to subscribe to Bharat-22 ETF NFO?
If you have demat / mutual fund account, you can visit IPO/NFO section of your account and locate Bharat ETF NFO link. You can select the same and indicate the amount and submit the same.
Should you invest in Bharat-22 ETF Index?
CPSE ETF has given 20% returns in the last 1 year and 50% in the last 3.5 years. Similar way one should not expect Bharat 22 ETF like any multibagger stock. If you are willing to take high risk and looking for good returns in longer run by investing in diversified portfolio of investments, one can consider investing in Bharat 22 ETF New Fund Offer. Alternatively you can invest in diversified equity mutual funds.
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Bharat-22 ETF NFO to open on 15th November – Should you invest
I just like to know that we can do Sip kind of investment after initial amount?
How to identify the expense ratio for such ETFs?
its 0.0095% for the first 3 years from listing.
Suresh – why are you saying that this is high risk investment when the portfolio consists of only blue chip companies and mostly all govt. agencies.
Hi Shanker, Investing in stocks itself is high risk. Now concentrating into few sectors and few stocks does not escape from high risk list 🙂
Wouldnt it be more profitable to invest directly in the stocks which consists of Bharat 22 ETF. One will also get dividends and bonus which is not applicable to ETFs.
EXCELLENT. But I want to make a humble request to inform how to invest. From where the form be available. How much amunt shall I invest.
Hi Madan, If you have demat account, you can login and go to NFO/IPO section and you would find the link