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Bharat Bond ETF: 10 things to know

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Edelweiss Mutual Fund has launched the second tranche of Bharat Bond ETF. Bharat Bond ETF is an exchange traded fund which will have a defined maturity tenure and will invest in AAA rated bonds of public sector companies.

The New Fund Offer (NFO) of the Bharat Bond ETF will open on July 14 and close on July 17. The ETF will offer two maturities – five years and 11 years to cater to the needs of both short term and long term investors.

The initial series of Bharat Bond ETF came in December 2019 which was oversubscribed by 1.7 times and garnered over 12,000 crore.

Here are the 10 things you need to know about Bharat Bond ETF NFO managed by Edelweiss Mutual Fund:

1. Bharat Bond ETF will offer two maturities of five years and 11 years maturing in April 2025 and April 2031 respectively. You can choose to invest based on your investment horizon.

2. The ETF will track Nifty BHARAT Bond Index – April 2025 or Nifty BHARAT Bond Index – April 2031 depending on the maturity. Indicative yield of Nifty BHARAT Bond Index – April 2025 was 5.60% and Nifty BHARAT Bond Index – April 2031 was 6.75% as on July 06.

3. Bharat Bond ETF- April 2025 aims to invest in bonds of PSUs like PFC, REC, Power Grid Corporation of India, National Housing Bank, IOC, National Bank for Agriculture & Rural Development, Hindustan Petroleum Corporation, NHPC, Export Import Bank of India, Indian Railway Finance Corporation, NTPC, Nuclear Power Corporation of India.

Bharat Bond ETF- April 2031 aims to invest in public sector companies like PFC, REC, Power Grid Corporation, National Highways Authority of india, Nuclear Power Corporation of India, Indian Railway Finance Corporation of India, Housing & Urban Development Corporation and NHPC.

4. The fund will be managed at a very low cost of maximum Re 1 for 2,00,000 worth investment. The fund will charge 0.0005% per annum for assets upto 10,000 crore.

5. Bharat Bond ETF will follow the taxation of debt funds. The returns will be taxed at 20% after indexation benefits. Indexation allows you to adjust the purchase price of your investment for inflation which in turn lowers the tax on your returns.

6. The scheme will be managed by Dhawal Dalal and co- managed by Gautam Kaul.

7. If you don’t have a demat account, you can invest in Bharat Bond fund of fund (FOF). There are two series of Bharat Bond FOFs, both investing in ETFs of respective maturities.

8. There is no lock in. An investor can buy or sell units on exchange any time during trading hours or through the Edelweiss AMC.

9. During the NFO period, retail investors can invest minimum 1,000 and in multiples of 1,000 thereafter, maximum upto Rs. 2,00,000. Retirement Funds, QIBs, Non Institutional Investors can invest minimum of 2,01,000 and in multiples of Rs. 1,000 thereafter.

Fund of fund allows to invest minimum of 1,000 and in multiples of Re 1 thereafter.

10. Existing Bharat Bond ETF-April 2023 and April 2030, launched in December last year hold assets worth 5,157 crore and 8,585 crore respectively. Their respective returns since launch are 7.49% and 9.15%.

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