What is Bharat (Exchange Traded Funds) ETF 22?


#1

Finance minister Arun Jaitley announced these new ETF 22 what is that about?


#2

ETF 22 is a part of the Government’s disinvestment strategy. It is just like the CPSE ETF that was launched earlier. It comprises of 22 companies across 6 sectors in the public sector. Each stock has a maximum weighage cap of 20% and sectors have a cap of 15%, this according to me is a decent portfolio strategy.

Do check this press coverage for more info.


#3

Bharat 22 is an Index which is being created by S&P Asia and an ETF is being derived from it. The goal behind the creation of this index is for the government to divest its holdings in these PSUs and SUTTI holdings.
The ETF will comprise of 22 companies and some from SUUTI (Specified Undertaking of Unit Trust of India). There will be a single stock cap of 15% and a sectoral cap of 20%. The components are diversified across Basic Metals, Energy, FMCG, Industrials and Utilities. Other AMCs can also use the Index to build their own products. This is the second ETF the government has come out with after the CPSE ETF through which it has raised Rs.9000 crores so far.

Index Constituents

Company Sector Weightage
Oil and Natural Gas Corp Ltd Energy 5.3
Baharat Petroleum Corp Lyd Energy 4.4
Coal India Ltd Energy 3.3
Indian Oil Corp Ltd Energy 4.4
Total 17.5
National Aluminium Co Ltd Basic Materials 4.4
State Bank Of India Finance 8.6
Axis Bank Ltd Finance 7.7
Bank Of Baroda Finance 1.4
Rural Electrification Corp Ltd Finance 1.3
Power Finance Corp Ltd Finance 1
Indian Bank Finance 0.2
Total 20.3
ITC Ltd FMCG 15.2
Bharath Electronics Ltd Industrials 3.3
Engineers India Ltd Industrials 1.5
NBCC Ltd Industrials 0.6
Total 22.6
Power Grid Corp Of India Ltd Utilities 7.9
NTPC Ltd Utilities 6.7
Gail India Ltd Utilities 3.7
NHPC Ltd Utilities 1.2
NLC India Ltd Utilities 0.3
SJVN Ltd Utilities 0.2
Total 20

90% of the equities included in the index are F&O constituents. ICICI Prudential will be the fund manager of the ETF.
The note seems to contain an error in the weightage assigned to stocks in the utilities sector.


#4

Can a retail investor buy? If yes, what is the process?


#5

It is an ETF so anybody can buy/sell it. The announcement was made today, the listing date has not yet been specified.


#6

Can you pls guide how to invest in bharat 22 etf n how to find it within kite.thanks.


#7

Bharat-22 ETF Index Launched – Should you invest?

Last week Finance Minister, Mr.Arun Jaitley announced the launch of new Exchange Traded Fund Bharat-22. Bharat-22 Exchange Traded Fund (ETF) consists of 22 blue chip stocks including, Central Public Sector enterprises, Public Sector Banks and other strategic holdings of Govt. of India through SUUTI. Bharat-22 ETF is the second ETF from Govt. of India after CPSE ETF, hence it is attracting investors in the stock market. What are the features of Bharat-22 Exchange Traded Fund (ETF)? What stocks are part of Bharat-22 ETF? How to subscribe to Bharat-22 ETF Index? Should you invest in Bharat-22 ETF Index?

What is Exchange Traded Fund (ETF)?

As per Wikipedia, an ETF is an exchange-traded fund (ETF) is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds and generally operates with an arbitrage mechanism designed to keep it trading close toits net asset value, although deviations can occasionally occur. Most ETFs track an index, such as a stock index or bond index. ETFs may be attractive as investments because of their low costs, tax efficiency, and stock-like features.Govt of India has launched its first ETF in Mar-2014 by name CPSE ETF which gained more than 20% in the last 1 year. CPSE ETF was sold in 3 tranches and Govt. of India received over Rs 8,500 Crores throught this ETF. Bharat-22 ETF would be second ETF from Govt. of India where it would divest upto Rs 72,500 Crores in various tranches through Bharat-22 ETF.

Features of Bharat-22 ETF Index

Finance Ministry programmed speedy divestment for Rs 72,500 Crores in its budget for FY2018. As part of this, it has launched Bharat-22 Exchange Traded Fund which consists of blue chip Stocks. It would divest and sell through this ETF in small tranches to retail and other institutions.

*.Bharat-22 ETF consists of diversified portfolio of 22 Blue Chip Stocks.

*.This ETF consists of state owned companies like like ONGC, IOC, SBI etc.

**.This ETF also consists of companies where Govt of India includes partial stakes like Axis Bank, ITC, Larsen and Toubro etc.,

*.This ETF also consists of blue chip stocks owned by Govt. of India through its holdings through Specified Undertakings of the Unit Trust of India (SUUTI).

*.Bharat-22 ETF would get listed on stock exchanges (BSE / NSE) in India.

*.This ETF NAV would go up or down based on the shareprices of 22 underlying stocks under this ETF.

Who is the fund manager for Bharat-22 ETF?

Govt. of India has appointed ICICI Pru AMC as ETF Manager for this fund. Asia Index Private Limited would be the index provider.

Which Sectors are part of Bharat -22 ETF?

Bharat-22 ETF consists of Energy, Financial Sector, FMGC Sector, Industrial segment and Utilities segment.

What stocks are part of Bharat-22 ETF?

Bharat ETF consists of 6 sectors and 22 stocks. It has sectorial cap of 20% (means it cannot invest more than this amount in single sector) and stock cap of 15% (Means it cannot invest more than 15% in single stock).

Bharat 22 ETF Index consists of the following stocks along with the weightage.

  1. Basic Materials segment – Total of 4.4%

National Aluminium Co Ltd (NALCO) – 4.4%

  1. Energy Segment – Total of 17.5%

Oil & Natural Gas Corp Ltd (energy) – 5.3%

Indian Oil Corp Ltd (energy) – 4.4%

Bharat Petroleum Corp Ltd (energy) – 4.4%

Coal India Ltd (energy) – 3.3%

  1. Banking and Financial Segment – Total of 20.3%

State Bank of India (finance) – 8.6%

Axis Bank Ltd (finance) – 7.7%

Bank of Baroda( finance) – 1.4%

Rural Electrification Corp Ltd (finance) – 1.3%

Power Finance Corp Ltd (finance) – 1%

Indian Bank (finance) – 0.2%

  1. FMCG Segment – Total of 15.2%

ITC Ltd (FMCG) – 15.2%

  1. Industrial Segment – (Total of 22.6%)

Larsen & Toubro Ltd (Industrials) – 17.1%

Bharat Electronics Ltd (Industrials) -3.3%

Engineers India Ltd (Industrials) – 1.5%

NBCC (India) Ltd (Industrials) – 0.6%

  1. Utilities Segment – Total of 20%

Power Grid Corp of India Ltd (utilities) – 7.9%

NTPC Ltd (utilities) – 6.7%

Gail India Ltd (utilities) – 3.7%

NHPC Ltd (utilities) – 1.2%

NLC India Ltd (utilities) – 0.3%

SJVN Ltd (utilities) – 0.2%

How does CPSE ETF Performed in the last 1 years?

CPSE ETF gave more than 20% returns in the last 1 year.In Mar-2017, CPSE ETF FFO came and it was issued at discounted price of Rs 26.8. It got listed in Mar-2017 at Rs 27.6. However the trend in the last 6 months has not been good. Till one week back it was trading at below its issue price. After the announcement of Bharat-22 ETF Index, CPSE ETF gained more than 10%. Means this has been under performer in the last 5-6 months despite stock markets reached to new highs.

How to subscribe to Bharat-22 ETF?

Though Govt of India has launched this ETF, you need to wait for formal launch of this ETF so that you can subscribe to it. Even this time, investors are expecting that Govt. of India would give retail discount (like CPSE ETF) which may be around 5% of the underlying NAV value. One need to wait for Bharat-22 ETF IPO to come for subscription.


#8

The latest update is ICICI Prudential MF has filed the offer document with SEBI, once approved the ETF will list on the exchanges.