bharat bond etf

The New Age Investment Product -
BHARAT BONDS ETF

What is an ETF ?

  • ETF stands for Exchange Traded Funds. ETF’s are basically, the Index Funds that are listed and traded on Stock Exchange like Stocks. In other words, ETF is a basket of securities that are traded on a Stock Exchange. As ETF contains number of securities, it has a benefit of diversification. ETF’s are traded throughout the day and its prices keep changing on the basis of Demand & Supply. ETF’s provide the combined benefit of Mutual Funds, Stocks and Bonds. Also, investment in an ETF is considered to be more Liquid & cost effective compared to that of investment in Stocks. Depending on the type of ETF, it can invest in stocks, commodities or Bonds or it can be specific to certain industry or a sector.

How is an ETF different from Stocks ?

  • ETF’s are traded on Stock Exchange just like stocks. But a Stock focuses on only one company whereas ETF has basket of securities or bonds or commodities. As ETF’s have multiple underlying securities, they are less risky compared to stocks.

Bharat Bond - Exchange Traded Fund

bharat bond logo

 

Introduction :

Bharat Bond ETF is the India’s first corporate bond ETF with a fixed maturity of five years and ten years. Bharat Bond ETF combines the features of close-ended fund and exchange traded fund, that virtually makes it an ideal open-ended target maturity product.

Primarily, the Investors Money will be invested in bonds issued by CPSEs/CPSUs/CPFIs and other Government organizations of AAA credit rating. These bonds are chosen such that its maturity co-terminates (as closely as possible) with the maturity of the fund.

Unlike traditional open-ended debt-oriented schemes, these funds are traded on the exchange (on which it is listed) throughout the day with a much lower cost compared to actively managed debt funds.

The fund has a defined maturity date wherein you will receive your investment amount with returns.There is no lock-in period. You can sell your units like you buy/ sell your shares through your trading & DMAT account.

What you can expect from your Investment in Bharat Bond

  • Higher Safety : Safety of Investing in Public Sector Bonds (PSU Bonds)
  • Stable Returns : Predictable Returns by Following Fixed Maturity Structure
  • Lower Tax : Taxed @ 20% Post Indexation
  • No Lock in : Buy/Sell anytime on the Stock Exchange.

BHARAT Bond ETF has the Best Combination of :

Bonds : Fixed Rate of Interest, Fixed Maturity Date, Low Interest Risk if Held till Maturity

Mutual Funds :  Professionally Managed, Diversified Portfolio, Tax Efficient

ETF’s : High Liquidity, Low Cost, High Transparency.

The BHARAT Bond Primarily in PSU Companies Like : REC, NABARD, Power Grid, NHAI, PFC, Indian Oil and many more. BHARAT Bond ETF will have a fixed maturity with a diversified portfolio of Public Sector Company Bonds.

It will invest in AAA rated SU bonds maturing on the maturity date of the respective fund or before the maturity date of the respective fund.

The BHARAT Bond has TWO Maturity Options :

Short Term : Bharat Bond ETF April 2025 Underlying Yield : 5.64%

&

Long Term : Bharat Bond ETF April 2031 Underlying Yield : 6.81%

Taxation :

The BHARAT Bond ETF provides the benefit of Indexation.

What is Indexation :

  • Indexation is an efficient way to reduce tax on your returns by adjusting it for inflation
  • Indexation allows you to adjust purchase price of your investment with inflation
  • It is applied to long term returns on your investments
  • Higher inflation means higher purchase cost which in turn means lower tax
  • Long term capital gains are taxed at 20 post Indexation in debt mutual funds

Hurry!!!...Bharat Bond Issue Opens On 14th July 2020

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Underlying Constituents

 

 Nifty BHARAT Bond Index April 2025 constituents

table 1

 

Nifty BHARAT Bond Index April 2031 constituents

table 2 bharat bond etf

 

Should you consider investing in Bharat Bond ETF ?

 

If you are still thinking whether to invest in the BHARAT Bond ETF, the answer is a BIG YES.

There are plenty of reasons why BHARAT Bond ETF should be the part of your portfolio.

Firstly, the BHARAT Bond ETF would be a safe and liquid compared to other investment avenues.

 

It primarily invests in the Bonds of AAA rated PSU Companies and hence investors don’t have to worry about the credit quality of the underlying portfolio. On the other hand if any company is downgraded from AAA to AA+ or is not a PSU anymore, it will be thrown out of the portfolio on the next rebalancing date thus maintaining its “100% AAA rated PSU Bonds” approach.

 

The BHARAT Bond ETF consists of some very high credit quality PSU’s Bonds such as NHPC, HUDCO, NHAI, NABARD, PFC, Power Grid Corp., NHPC, IRFC, NPCI, Indian Oil Corp.

Also, the BHARAT Bond ETF has defined maturity and you can expect predictable returns if held until maturity. If an investor holds the ETF until maturity, the interest rate risk also gets nullified.

 

 

The indicative yield for BHARAT Bond Index April 2025(Short Term) is approx. 5.64% and that of BHARAT Bond Index April 2031(Long Term) is approx. 6.81%. However, these are indicative yields and investor should not consider them as guaranteed returns.

 

BHARAT Bond ETF is also a cost-effective option when compared to other ETF’s or Debt Funds. BHARAT Bond ETF charges 0.0005% or 50 paisa per lakh rupees invested.

 

One should avoid active trading of BHARAT Bond ETF’s in secondary market as the price movement can be very volatile. The best way to generate good returns from BHARAT Bond ETF is to hold it till maturity.

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