Bharat Bond ETF, India’s first bond exchange-traded fund recently opened to a great reception by Indian investors. With several important reasons to subscribe, this ETF is quickly emerging as a winning idea for people looking to diversify their sluggish portfolios and generate wealth.
Managed by Edelweiss Mutual Fund, this new Exchange Traded Fund or ETF offer will allow investors to buy and sell bonds through an ETF structure at a significantly lower rate than conventional bonds. With a fixed maturity period, this fund follows the Nifty BHARAT Bond ETF Index and invests in high quality 'AAA' rated bonds issued by Public Sector Companies.
How does it work?
Approved by the government of India this December, the fund will invest in central public sector bonds with a similar maturity as the scheme. Investors can start purchasing units at a very affordable Rs1,000 with a low expense ratio of close to 0.0005%. Being an ETF, after the NFO (new fund offer), units are held in an investors Demat account and can be easily purchased and sold on the stock exchange during trading hours. On maturity, investors get back their investment and any returns accumulated.
Short- & Long-Term Investment Options
The ETF gives you two options of will have two target maturities of three and ten years each.
Useful benefits you should know about.
A bond like structure coupled with fixed maturity gives investors predictable and stable returns at maturity. Plus, investment in Public Sector bonds and transparent daily disclosure of portfolio constituents with live NAV updates in the day provides a calming reassurance that’s a huge plus.
With a reasonably low credit risk at this point, Bharat Bond ETF is primed to become that first-thought choice for many individuals. Depending on an investors risk profile, they can easily look to set aside about 10% of their fixed income portfolio to this new offering and avail of tax benefits of post indexation. Indexation is an efficient way to adjust the purchase price of your investment and reduce tax returns by adjusting it for inflation.
To know more about Bharat Bond, Click Here.
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Updated Date: Dec 18, 2019 17:21:44 IST