Should You Invest in Upcoming Bharat 22 ETFs?

The Govt. of India needs money to run, manage, and expand the economy of the country. The Govt. earns money mainly through Taxes and Disinvestment (selling their shares in Govt. PSUs to Public).

A disinvestment is a tool via which Govt. sells its stakes in the Stock Market and in return gets the desired funds. Every year Govt. sets the target of disinvestment in the budget. Initially, the Govt. was keen to sell their stakes separately in PSUs but that leads to disappointment as investors were not ready to buy the shares for the PSUs not doing well in the Dalal Street. Therefore, in 2017 the Govt. in the Union Budget announced to meet the target of disinvestment via new vehicle i.e. Bharat 22 ETFs. This is when Bharat 22 ETFs was born.

Bharat 22 ETFs comprises of following Companies:

Index constituents

Weightage

Index constituents

Weightage

ITC 14.26% BPCL 4.54%
L&T 16.92% Bharat Electronics 3.48%
Axis Bank 7.82% Bank Of Baroda 1.22%
SBI 7.25% Indian Bank 0.21%
NTPC 7.07% REC 1.18%
Power Grid Corporation 7.73% SJVN 0.23%
ONGC 5.54% NHPC 1.08%
National Aluminium 0.27% NLC India 0.27%
GAIL 4.25% NBCC India 0.68%
Coal India 3.72% Power Finance Corporation 0.99%
India Oil Corporation 5.00% Engineers India 1.44%

This Index is a unique blend of shares of Central Public Sector Enterprises (CPSEs), Public Sector Banks (PSBs) as also government shares in blue-chip private companies like Larsen & Toubro (L&T), Axis Bank and ITC. The fund is managed by ICICI Prudential AMC. This ETFs mirrors a readymade S&P BSE Bharat 22 Index. This is an open-ended exchange traded fund. There is no lock-in period for Retail Investors. They can sell it on the very next day of allotment.

1st Tranche of Bharat 22 ETF was launched in the month of Nov 2017; vide which Govt. has garnered close to Rs.14500 Cr against the total bid of Rs. 32,000 Cr.

2nd Tranche of Bharat 22 ETF was launched in the month of June 2018 vide which government garnered Rs. 8400 Cr from this round.

3rd Tranche opened in the month of Feb-19. The government had raised about Rs. 3500 Cr through a follow-on offer of Bharat-22 ETF in February.

Performance of the Bharat 22 ETFs in Last 1 Year:

The Bharat 22 ETFs has given Return of -8.33% as compared to the -24.14% return by NIFTY PSE in the last one year. The Performance of the Equity market has remained subdued in the last 1 year after the introduction of LTCG in the Union Budget. So this performance will not reflect the true picture as the whole Stock market has got beaten. However, we feel Bharat-22 ETFs will good returns in the coming year.

How to Apply?

Investors in this category can invest with the minimum investment amount of Rs. 5,000 and in multiples of Re.1 thereafter, subject to maximum investment amount of Rs. 2,00,000 (Rupees Two Lakhs Only). The investors can apply through ICICI MFs website, HDFC Securities app, Zerodha App or many other portals. In the case of oversubscription, the ETFs units will be given depending upon the number of the application.

Should You Invest?

The 3rd Tranche which is likely to open in this month will have a discount of 5% for the Retail Investors. We at InvestorZone feel that it is a good opportunity for the safe investors who are looking to invest in the blend of Good PSUs which have good dividend yield, and Good Private companies such as Axis Bank, L&T, and ITC for the long term and as well as for listing gain. Moreover, ETFs are a low-cost investment option as these have a lower operating cost, including the management fees. In ETFs, the fund manager does not select stocks but mirrors a readymade index.

Update of Bharat 22 ETF

4th Tranche is opening in the month of Oct. Get ready with funds. 

    Bharat 22 Etf FFO 3 launch date 3rd October for Anchor &
    4th October for Other category of investors.

    25% reserved for each category (Anchor, Retail, Retirement Fund & FPI/ Hni ).

    Discount 3%

    Issue size: 2000 crs + green shoe option

      Seeing the last issue of CPSE ETF, I’m a bit afraid in applying this one… Also discount is also less this time…

    i have purchased 120 heg share on 31 jan 2019 but till now i did not receive any mail regarding buyback what should i do now

    *************Congrats to all Investors************************

    It is official now, the units allocated are based on closing price of 14.02.2019.

    The allotment is done at 31.5191

    Total of 6345 units has been allocated.

    Current Market Price of Bharat 22 ETFs is 33.81

    So a profit of close to 15k per application.

    Forwarded message:

    Allotment of 6345 Units on 2 lacs @31.5191

    Please check at your end.

    This is for information.

      not very relevant now. What is relevant is allotment price ? Can it be sold tomorrow ?

    Fwd msg – *Bharat 22 ETF*

    Allotment: *22nd February*
    Trading: *25th February*

    HNI : Approx *20%* allotment

    Allotment Price : *31.45 Tentative*

    Investor zone is a best app… Very best… Good update IPOS BUYBA K NCD ETF AND MORE. good App

      The listing will be on 21.02.2019( i.e. 5 days of closing).

      In Grey Market, as per last heard, brokers are buying application at Rs 7000( for 2 lakh application in retail).

      So yes ready for some big party in ETF this time.

      Retail 100% will be accepted.

    Bharat 22 ETF unit weightage average price is likely to be 32.73.

    Approximately 4% discount will be given.

    Therefore effective price of unit after discount would be
    31.42.

    In case of full allotment in 2 lakh application approximately 6365 units will be alloted.

    Last closing price of Bharat 22 ETF is 32.85.

    Units are expected to get credit on or before 21st of February 2019.

    The Department of Investment and Public Asset Management (Dipam) will reconstitute its flagship exchange-traded fund — the Bharat 22 ETF — and remove shares of three companies — National Aluminum Co (Nalco), Engineers India Ltd (EIL) and Rural Electrification Corp — from it

    The first two stocks will be removed from the ETF because any further offering of the financial product will take the government’s shareholding in Nalco and EIL to below 52 per cent, something it doesn’t want.

      I hope it is not from immediate effect. it is only in a proposal stage i guess…

    Bharat 22 ETF unit weightage average price is likely to be 32.73.

    Approximately 4% discount will be given.

    Therefore effective price of unit after discount would be
    31.42.

    In case of full allotment in 2 lakh application approximately 6365 units will be alloted.

    Last closing price of Bharat 22 ETF is 32.85.

    Units are expected to get credit on or before 21st of February 2019.

      Discount is on average price of shares. Average price of shares can be different from Bharat 22 etf traded price

      Very difficult to find the exact discount percentage. ETF is buying ITC shares from the market and once it is marked determined, the % of discount would also change

      Useful FAQ. It looks that all investors will get 5 percent discount and not restricted to Retail investors alone. No lock in period also. There will be a rush to sell out and make short term profits. Hence may not get the 5 percent return…