The Government has announced the launch of its second exchange traded fund (ETF) called Bharat-22. For those who don't know, an exchange traded fund popularly called ETF, is very similar to a mutual fund. The ETF's are basically index funds that are listed and traded on exchanges just like stocks. (An index fund is a type of mutual fund with a portfolio constructed to match a particular market index like Nifty or Sensex).
You and other investors can purchase units of the ETF whose value depends on the rise and fall of the stocks which comprise of this index. So what is Bharat-22? Bharat-22 is an ETF where you and other investors, can invest your money. The value of Bharat-22 will rise and fall depending on the performance of the 22 stocks, which the index comprises of.
Bharat-22 will have a diversified portfolio of Companies from 6 sectors. There is a cap of 20% on each sector and a cap of 15% on each stock. Bharat-22 consists of 22 blue-chip stocks which also include stocks of central public sector enterprises (CPSEs), public sector banks and its holdings under the Specified Undertaking of Unit Trust of India (SUUTI).
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If you plan to stay invested in Bharat-22 for the long term, then go ahead and invest in this ETF. Analysts seem to like Bharat-22 as it shows the confidence of the Government in state-run public sector enterprises. Bharat-22 could be value for money to you and other investors.
After Prime Minister Narendra Modi came to power, he focused heavily on reforms to promote growth in the economy. One of his main areas of focus....PSU's which were neglected for a very long time. The Modi Government is concentrating on reforms, good governance and divestment. For those who don't know, divestment is an exact opposite of an investment. It is the process of selling an asset to meet financial, social or political goals.
Don't you think investing in Bharat-22 is a great idea?
The constituents of Bharat-22 are National Aluminium Co. Ltd., Oil & Natural Gas Corp. Ltd., Indian Oil Corporation Ltd., Bharat Petroleum Corp. Ltd., Coal India Ltd., SBI, Axis Bank, Bank of Baroda, REC, PFC, Indian Bank, ITC, L&T, Bharat Electronics Ltd., Engineers India Ltd., NBCC, Power Grid Corporation of India, NTPC, GAIL, NHPC, NLC India, SJVN.
The Government has not yet set a launch date for Bharat-22. ICICI Prudential AMC will manage this ETF. Asia Index Private Ltd will be the index provider. An index provider assists in all the steps of ETF Development.
Bharat-22 is well diversified and represents the performance of the Government, particularly its reforms and agenda over the long term. Bharat-22 could be better than other ETF's which are linked to only a particular sector or less diversified than Bharat-22. The Companies is this index are blue-chip companies which are fundamentally strong. These Companies will do well as the economy improves.
If you are a defensive investor who doesn't like taking too much risk while investing in equity, you can consider an investment in Bharat-22. You have to stay invested in Bharat-22 for a long time, if you want to see good returns.
Just take a look at CPSE ETF which is the first Government ETF, launched way back in March 2014. The CPSE ETF has risen more than 22% in the past year outperforming the Nifty 50 which has seen an 18% rise in the past year.
Don't you think a defensive player in the stock market should take a look at Bharat-22?
Banks are cutting interest rates offered on savings bank accounts and fixed deposits. SBI, India's largest lender, cut savings deposit rate from 4% to 3.5% a year. There has been a reduction in the interest rates of small savings schemes like PPF, NSC and Senior Citizen Savings Scheme. Perhaps its time to turn to the Bharat-22 with a little caution, Catchy names are not necessarily good deals. Be Wise, Get Rich.
Mr. C S Sudheer is the founder and CEO of IndianMoney.com – India’s largest Financial Education Company. He started his career with ICICI Prudential Life Insurance and later on worked with Howden India. After his brief stint in Howden India, he moved on and incorporated Suvision Holdings Pvt Ltd which is the sole promoter of IndianMoney.com. He aims to build a nation that is financially literate with investment savvy citizens.
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