Bharat 22 ETF opened on bourses: Arun Jaitley says 6 core sectoral companies make index diversified
In Bharat 22 ETF, shares of government companies represent 6 core sectors of economy
Mumbai: Finance Minister Arun Jaitley on Tuesday in a series of tweets lauded the Bharat 22 ETF — new exchange traded fund issued by the government — that puts stakes of some of the major central public sector undertakings on sale on bourses. The ETF forms part of central government's plan to raise Rs 72,500 crore from disinvestment of some public sector enterprises.
"Govt of India is undertaking a number of Key Economic Reforms which is driving growth in these sectors of economy. The major reforms for which market expert believe will fuel the growth in the economy and may benefit the underlying stocks in ETF," he said.
This is expected to benefit long term and retail investors by providing an opportunity of participation in equity stocks of the government run companies and earn stable returns, he added.
"Through this instrument, the Govt of India is divesting multiple stocks spread across various sectors in one bundled instrument thereby reducing over hang on individual stocks and maximizing sale proceed for the Government," he added.
The sector and stock exposure limits help in risk management and reduction of concentration, providing stability to the index. Strength of index has been demonstrated in its performance from the time of its launch in August 2017 wherein it has out-performed the Nifty 50 and Sensex, finance minister added.
It may be noted that shares of the government companies represent 6 core sectors of the economy — Finance, Industry, Energy, Utilities, Fast Moving Consumer Goods (FMCG) and Basic Materials. This combination makes the index broad-based and diversified.
"The strength of this ETF lies in the specially created Index S&P BSE BHARAT-22 INDEX. This Index is a unique blend of shares of key CPSEs, Public Sector Banks (PSBs) and also the Government owned shares in blue chip private companies like Larsen & Tubro (L&T), Axis Bank and ITC," he tweeted.
The units of the scheme will be allotted 25 percent to each category of investors. In this ETF, retirement fund has been made separate category of investors. In case of spill-over, additional portion will be allocated giving preference to retail and retirement funds, finance ministry informed.
The government of India launched on Tuesday the Bharat 2 Exchange Traded Fund (ETF) managed by ICICI Prudential Mutual Fund targeting an initial amount of about Rs 8,000 crore. This new fund offer is open till November 17, 2017.
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ETFs function like a mutual fund scheme and have underlying assets of government-owned companies.