Bharat Bond ETF’s Second Tranche To Launch On July 14
The second tranche of India's first debt-based exchange traded fund will open for subscription on July 14, as part of government's plan to deepen its corporate bond market.
The Bharat Bond ETF—an initiative of the Government of India—plans to raise Rs 14,000 crore, including a green shoe option of 11,000 crore, according to a presentation by Edelweiss Mutual Fund—the manager of the issue. The offer will close on July 17.
The ETF may be listed by the end week of July, an official at the fund house told BloombergQuint on the condition of anonymity.
The Bharat Bond Fund of Funds will invest in two ETFs—one maturing in April 2025 and the other on April 2031. An initial amount of Rs 2,000 crore will be raised from Bharat Bond ETF-April 2025 with a green shoe option of Rs 6000 crore, and Rs 1,000 crore from Bharat Bond ETF-April 2031 with a green shoe option of Rs 5,000 crore, the presentation said.
The scheme will invest in constituents of underlying Index. The tentative yield of short-term (five years) maturity bonds will be 5.72% and 6.79% for long-term (11 years) bond ETF.
The first series of the Bharat Bond ETF was launched in December 2019, and raised more than Rs 12,400 crore.
Retail Investment
An individual retail investor can put in a minimum of Rs 1,001 and in multiples of Re 1 thereafter, subject to a maximum investment amount of Rs 200,000. For non-institutional investors, it is to an extent of Rs 200,000 and in multiples of Re 1 thereafter.
The basket size for unit creation and redemption for large investor is Rs 25 crore and in multiples of Re 1 thereafter, the presentation said.
These bond ETFs will have a fixed maturity period with a diversified portfolio of AAA-rated public sector company bonds. The fund will have a defined maturity date and at maturity investors will get back their proceeds along with returns.
Other futures include:
Bonds
- Predictable returns
- Fixed maturity date
- Lower interest rate risk if held till maturity
Mutual Funds
- Diversified portfolio
- Professionally managed
- Tax efficiency
ETFs
- High liquidity
- Low cost
- Transparency
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