The fourth tranche of BHARAT Bond ETF – India’s first corporate bond ETF – will be launched on Friday, December 2, 2022. This new fund offer (NFO) will close for subscription on December 8, 2022.
This central government initiative parks funds only in “AAA-rated bonds” of public sector companies. These issues being managed by Edelweiss Asset Management would mature in April 2033 and offer a yield-to-maturity of 7.50 percent.
The base issue size is ₹1,000 crore with a green shoe option of ₹4,000 crore. The size of the assets under management in the recent BHARAT Bond ETF issue crossed the ₹50,000 crore mark, thus, highlighting growing investors’ interest in these fixed maturity bonds.
Since these bonds can be traded on stock exchanges, the lock-in period concept would not apply to them. This means that these bonds can be bought or sold during the fund tenure subject to the fund’s liquidity.
Tuhin Kanta Pandey, Secretary, DIPM, Ministry of Finance, said, “'BHARAT Bond ETF program has received an enthusiastic response from all categories of investors since its launch. BHARAT Bond has created a unique opportunity for all Indian investors to invest in PSU bonds and fuel India’s growth story. Crossing a landmark ₹50,000 cr, the AUM is a testament that BHARAT Bond has emerged as a trusted investment avenue with better tax efficiency for many Indian investors.”
Explaining how Edelweiss MF continues to be a leader in the target maturity funds space, Radhika Gupta, MD & CEO, Edelweiss Mutual Fund, said, “Target Maturity Fund category is growing at an exciting pace post the launch of Edelweiss MF’s Bharat Bond ETF. Investing in long-term debt has been brought to the forefront by these funds. BHARAT Bond ETF now has six maturities – from 2023 to 2033, which will allow investors to select the right maturity as per their investment goals. We take great pride in launching BHARAT Bond ETF along with the Government of India, which paved the way for an entire new mutual fund category and changed India’s investing landscape.”
This latest ETF issue will contain papers issued by the National Bank for Agriculture and Rural Development, National Highways Authority of India (NHAI), Power Finance Corp, NTPC and more. To date, Edelweiss MF has launched ETFs on behalf of the government through three tranches.
Risk-averse investors continue to park their money in these funds owing to the simplicity and transparency inherent in these investment vehicles. These issues offer liquidity, stability, and predictability of returns while incurring lower tax imposition compared to traditional investment options such as fixed deposits.