ICICI Prudential Bharat 22 Fund of funds or FOF is opening for investors from 19 June 2018 to 22 June 2018. Through this second phase of Bharat 22 Exchange traded fund, the centre is looking to raise approximately ₹6,000 crore.
This follow-on public offer is being managed by ICICI Prudential Asset Management Company (AMC). This is a follow up of the 1st part of the Bharat 22 ETF offering by the government in November 2017.
The scheme seeks to give its investors growth and stability. It aims to deliver this by investing in 22 stocks from 6 core sectors. This is aimed to culminate into long-term wealth creation for its investors.
Bharat 22 ETF
Read more here.
Bharat 22 is essentially an exchange-traded fund. In simple terms, the chief objective of ETF is to inspire and enhance the disinvestment enterprises of the central government.
One must note that the ETFs are similar to the mutual funds. Nonetheless, they can be bought and sold on exchanges just like stocks. This combines the benefits of both these securities into a single security.
Details Bharat 22 ETF
|Issue opens on||19th June 2018|
|Issue closes on||22nd June 2018|
|Benchmark||S&P BSE Bharat 22 Index|
|Scheme||Bharat 22 ETF|
|Fund Managers||Kayzad Eghlim|
Investment Objective of ICICI Prudential Bharat 22
This product is suitable for those investors who are seeking long-term wealth creation. It is primarily a fund of funds with the primary objective to generate returns by investing in units of Bharat 22 ETF.
The aim of the Bharat 22 ETF is to provide returns that closely correspond to the returns provided by S&P BSE Bharat 22 Index, subject to tracking error.
Bharat 22 ETF
Bharat 22 ETF is an Exchange Traded Fund (ETF) comprising shares of listed Central Public Sector Enterprises (CPSE), some of the strategic holding of Specified Undertaking of Unit Trust of India (SUUTI) and other corporate entities. This was rolled out as a part of the disinvestment programme by the Government of India (GOI).
Bharat 22 ETF invests in equity securities of the companies of “S&P BSE Bharat 22 Index”. This is also the Benchmark Index of the ETF.
This ETF comprises of 22 stocks under the S&P BSE Bharat 22 Index. As mentioned earlier, these comprise the shares of Central Public Sector Enterprises (CPSE), Public Sector Banks and some of the strategic holding of Specified Undertaking of Unit Trust of India (SUUTI).
S&P BSE Bharat 22 Index is a well-diversified index which invests across six different sectors. Towards this purpose, the stock level is capped at 15% and the sector is capped at 20% for this ETF.
CPSE ETF was launched prior to the launch of Bharat-22 ETF. That was a diversified portfolio that the government had floated. The CPSE ETF comprised stocks of 10 bluechip PSUs – GAIL (India), Oil India, PFC, Bharat Electronics, ONGC, Coal India, IOC, REC, Engineers India and Container Corporation of India.
Through the CPSE ETF, the government had been successful in raising ₹11,500 crore. The said sum of money was however raised in three tranches – ₹3,000 crore was raised from the first tranche in March 2014. This was followed by ₹6,000 crore which was raised from the second tranche in January 2017. Still further ₹2,500 crore was raised last from the third tranche in March 2017.
Bharat 22 ETF Further Fund Offer
“The Bharat-22 FFO is another opportunity for the investors to participate in the India growth story as represented by the industry-leading stocks of the ETF” opined the Secretary in the Department of Investment and Public Asset Management Atanu Chakraborty.
The ETF aims to generate long-term wealth for its investors. For this purpose, the fund aims to invest in 22 stocks from 6 important sectors only. The fund seeks to deliver growth and stability.
ICICI Prudential AMC Managing Director and CEO Nimesh Shah opined “We are happy to see the continued support received from anchor investors towards the FFO… Now, we look forward to active participation from non-anchor investor category, over the next three days, whereby one has the opportunity to own some of the jewels of Corporate India at a discounted price.”
The ETF comprises of leading companies from the private sector. Cumulatively they have a combined exposure of 39% to the fund while the rest are public sector firms.
The fund consists of stocks from six sectors such as finance, oil & gas, power, capital goods, FMCG, metal, metal products and mining.
Moreover, the state-owned companies or Public Sector Undertakings that are part of the Bharat ETF-22 include IOC, SBI, BPCL, ONGC, Coal India and Nalco.
The other central public sector enterprises included in the Bharat 22 ETF are NBCC, NTPC, NHPC, Bharat Electronics, Engineers India, NLC India SJVNL, GAI, and PGCIL.
The only three public sector banks that figure in the Bharat-22 index are SBI, Indian Bank and Bank of Baroda.
This fund of funds and new fund offer maybe a good option for growth and stability for the investors. Long-term time horizon should be kept in mind before investing in this follow-on offer. The investment should be a function of the risk-return capacity of the investor.
Disclaimer: the views expressed are of the author and do not reflect those of Groww.