Bharat Bond ETF opens for subscription

MUMBAI: India's first corporate bond exchange-traded fund (ETF) -- the Bharat Bond ETF, which is also the country’s largest new fund offer (NFO) ever, opened for subscription on Thursday. The ETF is a government initiative and Edelweiss AMC was given the mandate to design and manage the product.

Edelweiss AMC proposes to raise a total of up to Rs 15,000 crore through the offer. It plans to raise an initial amount of Rs 3,000 crore with a greenshoe option of Rs 2,000 crore in the 3-year maturity period and Rs 4,000 crore with a greenshoe option of Rs 6,000 crore in the 10-year maturity bracket.

"The expense ratio of this ETF is the lowest in India and also the lowest for any debt fund in the world at 0.0005 per cent," Nitin Jain, CEO at Edelweiss Global Investment Advisors said at the press briefing.

The fund house plans to launch more tranches in times to come.

“We hope to come back to the market with another tranche… We will do some fresh issuance. Maybe we will inject is with Rs 500 crore – Rs 1,000 crore of liquidity. CPSEs have committed not only to the fresh tranche but to reassurances in the existing tranches (as well),” said Radhika Gupta, CEO, Edelweiss AMC, adding the next tranche could be in current fiscal or later.

The ETF will invest only in AAA-rated bonds of public sector undertakings (PSUs).

It will have target maturity structures. The 3-year maturity ETF will follow the Niffy Bharat Bond index -April 2023 and the one with the 10-year maturity period will follow Nifty Bharat Bond Index - April 2030.

The yield on both these bonds as on December 5 was 6.69 per cent and 7.58 per cent respectively.

Bharat Bond Funds of Funds is also being launched for investors who do not hold demat accounts.