BHARAT 22 launched by the government
BHARAT 22 is the second exchange traded funds and it is a new Exchange Traded Fund (ETF)
Bharat-22 that will comprise stocks of 22 blue-chip public sector units, State-owned banks and some holdings in SUUTI ((Specified Undertaking of Unit Trust of India).
BHARAT 22 – Key Features
Bharat 22 is a well Diversified portfolio with 6 sectors (Basic Materials, Energy, Finance, FMCG, Industrials & Utilities).
The Bharat 22 Index will be rebalanced annually. ICICI Prudential AMC will be the ETF Manager and Asia Index Private Limited (JV BSE and S& P Global) will be the Index Provider.
Exchange-traded funds (ETFs) are essentially index funds that are listed and traded on exchanges like stocks.
An ETF is a basket of stocks with assigned weights that reflects the composition of an index.
Through the first CPSE ETF launched in March 2014 and currently managed by Reliance Capital Ltd, the government raised Rs8,500 crore, selling in three tranches.
It consisted of stocks of 10 public sector entities—Oil and Natural Gas Corp. Ltd (ONGC), Coal India Ltd, Indian Oil Corp. Ltd (IOC), GAIL (India) Ltd, Oil India Ltd, Power Finance Corp. Ltd (PFC), Bharat Electronics Ltd (BEL), Rural Electrification Corp. Ltd(REC), Engineers India Ltd and Container Corporation of India Ltd.
The government holds an 11.17% stake in ITC Ltd, 8.16% in Larsen & Toubro Ltd (L&T) and 11.53% in Axis Bank Ltd through SUUTI, an offshoot of the erstwhile state-run investment firm Unit Trust of India.
Government may have included the public sector bank stocks to get a better valuation out of them.
The government has set a “stiff target” of Rs72,500 crore for disinvestment in 2017-18 and has so far garnered Rs9,300 crore.
The initial public offering of state-run shipbuilder Cochin Shipyard Ltd was subscribed 76.1 times on Thursday, the final day of the public offering.
ETF is a successful experiment globally with assets under management (AUM) of $4 trillion.
Globally ETF Assets have grown significantly. Globally today there are 4 trillion dollar worth Assets Under Management (AUM). These are expected to touch $7 trillion by 2021.
Large Investors (Sovereign/Pension Funds) prefer investing in ETFs due to the benefits of ETF being Low cost & Less risky; being Highly Liquid assets; Transparent Investment and that these can be traded at Real Time Market Price
Over four years, AUM is expected to touch $7 trillion as sovereign and pension funds have started preferring the ETF mode