Bharat Bond ETF Second Tranche Opens on July 14, 2020

Edelweiss AMC is planning to launch the second tranche of Bharat Bond ETF next week. Two series of the exchange-traded fund will be launched on July 14, 2020. Bharat Bond is a government of India (GOI) initiative to raise money from the public by making bonds available for you to purchase and Edelweiss AMC has been given the responsibility to launch the product and design the same. The AMC is aiming to raise around Rs 14,000 crores through the second tranche.

Before we delve deeper into the product, let’s get a quick understanding of how bonds work and what’s in it for you.

What is BHARAT Bond ETF and FOF?

BHARAT Bond ETF is an Initiative by the Government of India to cater to the borrowing requirements of the Public Sector by pooling investments from retail, HNI and institutional investors. .

BHARAT Bond Exchange Traded Fund is a low-cost basket of CPSE bonds that seeks to replicate an index and trades on the stock exchange. The ETF would replicate the underlying index which will comprise bonds issued by CPSEs, CPSUs/CPFIs and other Government organizations. ETF and indices will have a specific maturity date.These ETFs are passively managed. 

The BHARAT Bond ETF will have two series. One that will mature in April 2025 and the other in April 2031.The NFO period for both the series will begin on July 14, 2020, and end on July 17, 2020.

Here are the underlying indices for both the series respectively:

• BHARAT Bond ETF – April 2025: Nifty BHARAT Bond Index – April 2025
• BHARAT Bond ETF – April 2031: Nifty BHARAT Bond Index – April 2031

BHARAT Bond FOF is an alternative option of investment especially for those investors who do not hold a Demat account. The FOF’s will invest in the units of the underlying  BHARAT Bond ETF of respective maturities.

BHARAT Bond FOF (fund of the fund) will also be launched for those investors who do not have a Demat account.

How Can You Invest in BHARAT Bond ETF

There are actually three ways you can invest in this fund:

• You can invest in the bond during the NFO period, which is known as the primary market for the bond. Around 25% of the subscription is reserved for retail investors and the rest 75% is reserved for other categories of investors.
• After the NFO period ends, which is July 17, 2020, these bonds will be listed on the exchanges and traded just like all other ETFs. You can buy and sell them during market hours. For this, you will need a Demat account.
• Basket size for unit creation and redemption through AMC for large Investor is Rs. 25 crores and in multiples of Rs 1 thereafter
• In case you don’t have a Demat account and still want to be able to invest in this ETF bond, you can invest in Bharat Bond FOF (fund of funds).

What is Target Maturity Bond ETF? 

A Target Maturity Bond ETF is an exchange-traded fund that has a defined fixed maturity that invests in bonds with a similar maturity. This enables it to combine features of bond and mutual funds both. In these ETF’s the underlying securities are held closer to the maturity of the Scheme.

Fund Details

Depending on the route you choose to invest, here are the details:

Expense ratio: 0.0005%

Minimum Investment Amount

Here are the minimum investment requirements for different investor categories under BHARAT Bond ETF.

• Retail individual investor: If you are a regular investor including NRIs sole proprietorships and Hindu Undivided Families (HUFs), your minimum investment amount is Rs 1,001 and in multiples of Rs 1 thereafter, subject to the maximum investment amount of Rs. 2,00,000/-
• Retirement funds, non-institutional investors and Qualified Institutional Buyers (QIBs): Investors in these categories have a minimum investment amount requirement of Rs 2,00,001 and then in multiples of Rs 1 thereafter.

BHARAT Bond FOF

• Minimum investment amount: Rs 1,000 for BHARAT Bond FOF and in multiples of Re 1 thereafter
• Exit load 0.1% if redeemed within 30 days and NIL exit load if redeemed after.

Directly from AMC: If you buy the units of the BHARAT Bond ETF directly from the AMC, the minimum investment amount is Rs 25 crores.

Modes of Investment Available

You may invest in BHARAT Bond FOF via SIPs, STPs and SWPs post the NFO period. 

If you are investing in Bharat Bond ETF on the exchanges, there is only one way to trade during the market hours.

Constituents of the Indices

NIFTY BHARAT  Bond Index – April 2025 constituents

• POWER FINANCE CORP.LTD. 
• REC LIMITED 
• POWER GRID CORP.OF INDIA LTD.
• NATIONAL HOUSING BANK
• INDIAN OIL CORP.LTD.
• NATIONAL BANK FOR AGRICULTURE & RURAL DEVELOPMENT
• HINDUSTAN PETROLEUM CORP.LTD.
• EXPORT-IMPORT BANK OF INDIA
• INDIAN RAILWAY FINANCE CORP.LTD.
• NTPC LTD.
• NHPC LTD.
• NUCLEAR POWER CORP.OF INDIA LTD.

NIFTY BHARAT Bond Index – April 2031 constituents

• POWER FINANCE CORP.LTD.
• REC LIMITED 
• POWER GRID CORP.OF INDIA LTD.
• NATIONAL HIGHWAYS AUTHORITY OF INDIA
• NUCLEAR POWER CORP.OF INDIA LTD. 
• INDIAN RAILWAY FINANCE CORP.LTD.
• NHPC LTD.
• HOUSING & URBAN DEVELOPMENT CORP. Ltd

Risk Profile 

Risk Profile of Bharat Bond ETF ( As per the scheme information document)

Risk Profile of Bharat Bond FOF ( As per the scheme information document)

Mutual fund investments are subject to market risk, please read all scheme related documents carefully before investing.

Happy Investing!