Everything about Bharat 22 ETF by Government – Invest or Not?

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Government of India has recently launched Bharat 22 ETF. After the successful launch of CPSE ETF in January 2017, government has come up with Bharat 22 ETF. It is an exchange traded fund. The main purpose for launching this ETF is to encourage and boost up its disinvestment initiatives. Bharat 22 ETF reflect the performance of 22 companies in which government held the stakes and want to divest. This ETF will collect the money from the subscribers and will invest in these 22 stocks. In addition to this, it will also reflect the performance of the index.

Bharat 22 ETF will invest in top PSU’s as well as blue chip public and private companies in which government holds a stake through Specified Undertaking of the Unit Trust of India (SUUTI).

What stocks are part of Bharat 22 ETF?

1. Finance – 20.3%

  • State Bank of India – 8.6%
  • Axis Bank – 7.7%
  • Bank of Baroda – 1.4%
  • Rural Electrification Corporation – 1.3%
  • Power Finance Corporation – 1%
  • Indian Bank – 0.2%

2. FMCG – 15.2%

  • ITC – 15.2%

3. Basic Materials – 4.4%

  • National Aluminium Co. Ltd – 4.4%

4. Energy – 17.5%

  • ONGC Ltd – 5.3%
  • IOCL Ltd – 4.4%
  • Bharat Petroleum – 4.4%
  • Coal India Ltd – 3.3%

5. Utilities – 20%

  • Power Grid Corporation of India – 7.9%
  • NTPC Ltd – 6.7%
  • GAIL India Ltd – 3.7%
  • NHPC Ltd – 1.2%
  • NLC India Ltd – 0.3%
  • SJVN Ltd – 0.2%

6. Industrial – 22.6%

  • Larsen and Toubro – 17.1%
  • Bharat Electronics Ltd – 3.3%
  • Engineers India Ltd – 1.5%
  • NBC Ltd – 0.6%

Key Features of Bharat 22

  • Its a new fund offer, date and other details yet to be announced.
  • Demat account is mandatory in order to purchase this ETF.
  • Bharat ETF comprises of 6 different sector namely Finance, FMCG, Energy, Basic material, and utility sector.
  • It also include Blue Chip companies such as  SBI, IOCL, NTPC, ONGC, Coal India & Power grid.
  • The trading of fund will takes place on BSE and NSE.
  • The returns of the ETF depends upon the performance of 22 stocks.
  • ICICI Prudential AMC will be managing this government ETF.

Bharat 22 ETF – Whether Invest or not?

  • Your 41% of the corpus will be invested in 3 stocks L&T, ITC and SBI. All these stocks belongs to different sectors so there is diversification.
  • The performance of this ETF depends mainly upon 11 stocks which covers 85.5%.
  • It is a fund launched by government. If we look at the earlier government ETF, CPSE ETF, then 3 year return was just 3.85%.
  • A highly diversified exchange traded fund as it comprises of 22 stocks.
  • The average return of the large cap fund consisting of the above stocks is 12%.

So, I will suggest you not to invest a huge amount on this new fund offer. Instead invest a small amount so that if anything goes wrong, you didn’t have to loose your hard earned money.

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