By Tricitynews
Chandigarh 26th
Dec:- Edelweiss Asset Management company,
a Group company of Edelweiss today announced the public issue of India’s first
Corporate Bond ETF called the Bharat Bond ETF. This ETF is an initiative of the
Government of India, from the Department of Investment and Public Asset
Management and the latter has given the mandate to Edelweiss AMC to design and
manage the product.
The Bharat Bond ETF will help to
deepen the corporate bond markets and enhance retail participation. The ETF
will invest only in AAA rated bonds of Public Sector companies. Through the
ETF, Edelweiss Mutual Fund proposes to raise an initial amount of 3000 crores
with a green shoe option of 2000 crores in the 3-year maturity period (2023)
and 4000 crores with a green shoe option of 6000 crores in the 10-year maturity
bucket (2030).
The ETFs will have target maturity
structures. The ETF with a 3 year maturity will follow the Nifty BHARAT Bond
Index -April 2023 and the one with a 10 year maturity will follow the Nifty
BHARAT Bond Index April 2030. The yield
as on 05 December, 2019 of Nifty BHARAT Bond Index – April 2023 is 6.69% and
Nifty BHARAT Bond Index – April 2030 is 7.58%*. The investors who hold
these ETFs for more than 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. For more details please visit: https://www.bharatbond.in/
BHARAT Bond Funds of Funds (FOF) is
also being launched for investors who do not have Demat accounts.
BHARAT Bond ETF provides the best
features of Mutual Funds, ETFs and Bonds. It provides safety because it
consists of a high quality basket of public sector companies, liquidity and
access at a much lower ticket size, compared to investment in individual
bonds. BHARAT Bond ETF is also the lowest cost mutual fund product
in India and the cheapest bond ETF/fund in the world. If a retail investor
invests 2 lakhs in Debt ETF’s, the AMC will be charging a management fee of
just one rupee.
* The Scheme will invest in
constituents of underlying Index. The indicative yield provided is of the Index
and not that of the Scheme. The Scheme (s) are neither Capital Protected nor a
guaranteed Return Product and may or may not generate return in line with the
Index.
Nitin
Jain, CEO, Edelweiss Global Investment Advisors, said that
we are honoured that the government has given us the mandate to manage India’s
first corporate bond ETF. The government’s initiative to launch this
product will help to deepen the corporate bond market and provide a very low
cost, tax efficient debt product that is ideally suited for retail investors.
The product has been developed after more than a year of deliberations between
DIPAM, Edelweiss and NSE and has truly disruptive potential.
Radhika
Gupta, CEO, Edelweiss Mutual Fund said that the Bharat Bond ETF has a
unique target maturity structure that is designed for the needs of Indian fixed
income investors, who want predictability of returns in their debt investments.
The ETF combines the benefits of three products – it is diversified like a
mutual fund, trades on the exchanges like a stock and matures like a bond.
It will lead over the years to development of a complete yield curve of high
quality public sector bonds, bringing transparency in bond pricing.
Borrowers will now have a wider range of tenors in which to borrow, and
investors a full range of debt products to match their investment time
horizons.
Globally Bond ETFs have grown at a
healthy pace in the last decade, primarily due to lower costs compared to
traditional bond funds. Bond ETF AUM globally is around $1 trillion. Total ETF
AUM across all asset classes is at around $4 trillion.
