Third tranche of Bharat Bond ETD What every investor should know about

Bharat Bond ETF is ready to launch its third tranche in March-April this year. Read on to know more.

Third tranche of Bharat Bond ETD What every investor should know about

Bharat Bond ETF is an exchange-traded fund launched by the Government of India. It was introduced to cater to the borrowing needs of Central Public Sector Enterprises (CPSEs). The bond takes investments from retail, high net worth individuals, and institutional investors. 

Here are some things you should know about Bharat Bond ETF:

  • Bharat Bond ETF is listed on the National Stock Exchange (NSE). 
  • It invests money from investors in public sector bonds. 
  • The fund has a defined maturity tenure. So, investors receive their invested capital along with the returns earned at the time of maturity. 
  • Investors can buy or sell units of the debt fund on NSE throughout the tenure of the ETF. 

What should investors know about the third tranche of Bharat Bond ETF?
The new tranche of Bharat Bond ETF is expected to raise approximately Rs 15,000 crore from retail investors with a view to fund the growth of state-owned entities. The latest tranche will be the third in the series and is likely to be launched in March or April 2021. 

Bharat Bond ETF is a debt fund aiming to raise money that can contribute and help with the borrowing plans of CPSEs and various public sector banks. The ETF can also aid these entities in meeting their capital expenditure requirements. 

Notably, Bharat Bond ETF invests only in AAA-rated bonds of public sector companies. It has had two previous tranches. 

RelatedBharat Bond ETF: What investors should know about

How does Bharat Bond ETF benefit investors?

Here are some ways in which investors can benefit from this bond:

  • Stable returns: Investors can earn relatively stable returns with a fixed tenure. The returns are also tax-efficient.
  • Enhanced safety: The bond invests in the NIFTY Bharat Bond Index comprising of public sector bonds, thereby ensuring a high degree of safety.
  • Low cost: The costs involved are quite low, with a management cost of 0.0005% p.a. 
  • No lock-in period: There is no lock-in period and investors can buy and sell on the NSE during trading hours. 
  • Transparency: The fund invests in the NIFTY Bharat Bond Index and its constituents are shown on the website for investors to check on a daily basis, ensuring complete transparency. 
  • Convenience: Bharat Bond ETF is a passively managed fund. This not only reduces costs but also offers a hassle-free experience compared to actively managed funds. 

Related: What are tax-free bonds and how they work

What did the first two tranches of Bharat Bond ETF entail?
The first tranche of Bharat Bond ETF offered maturity options for 3 and 10 years. After the success of the first tranche, a second tranche was made available for investments in July 2020. The second tranche was launched by Edelweiss Asset Management. This tranche offered maturity options of 5 and 12 years. 

Also read: If you like investing in ETFs, check out 7 benefits of investing in gold ETFs.

Disclaimer: This article is intended for general information purposes only and should not be construed investment advice. You should separately obtain independent advice when making decisions in these areas.


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