As promised in Budget speech 2016-17 Finance Minister has launched a new Exchange Traded Fund (ETF) by the name “BHARAT 22”. It is the second ETF to be launched after CPSE ETF (launched in 2014). BHARAT 22 ETF comprises of 22 stocks including Specified Undertaking of Unit Trust of India (SUUTI), central public sector enterprises (CPSE) ETF and PSU banks. ICICI Prudential AMC is the ETF Manager and Asia Index Private Limited (JV BSE and S& P Global) is the Index Provider.
What is an ETF?
An ETF or Exchange Traded Fund is a security that tracks an index, a commodity, bonds or a basket of assets just like an index fund. ETF is similar to a mutual fund but unlike the same, it is traded like a common stock on a stock exchange. Due to its high liquidity and lower fees it is generally an attractive alternative for individual investors.
The government has set a target for disinvestment in 2017-18 at Rs 72,500 crore and so far approx Rs 9,300 crore has been realized through nine disinvestment transactions. BHARAT 22 will further help the government in achieving its target.
BHARAT-22 ETF Portfolio
Unlike the earlier ETF (the CPSE ETF which had many energy companies), BHARAT-22 ETF has a well-diversified portfolio spanning 6 sectors: Basic Materials, Energy, Finance, FMCG, Industrials and Utilities. There is a sectoral capping of 20 percent and a single company stock cap of 15 percent.
The index constituents and its weightage are as follows:
About CPSE ETF:
The first central public sector enterprises (CPSE) ETF, which was launched in 2014. It comprised of 10 companies – Oil and Natural Gas Corp. (ONGC), Coal India, Indian Oil Corp.(IOC), GAIL(India), Oil India, Power Finance Corp. (PFC), Bharat Electronics, Rural Electrification Corp. (REC), Engineers India Ltd and Container Corporation of India.