Amazing Facts about ODIN’s Trading Platform
To understand Bharat 22 ETF, you need to understand about ETF first, so first thing first, what is an ETF?
Exchange-Traded Fund (ETF)
ETF is the abbreviation of the exchange-traded funds. ETFs are primarily Index Funds that are listed and traded like stocks in an exchange.
Exchange-Traded Fund (ETF) is a type of security that constitutes a collection of securities such as stocks, commodities, bonds, and works of arbitrage mechanism.
Use of ETF vis-à-vis shares
There are a lot of advantages that an ETF offers. ETF offers Diversification. ETF investments offer exposure to specific sectors. It is a combination of specific stocks, commodities and other relevant products, thus helping an investor diversify his/her investments.
ETF offers Liquidity as in ETFs are traded directly over the stock exchanges, where one can trade in ETF stocks at any point in time.
The ETFs call for lower expenses as compared to Mutual Funds due to several reasons. Direct and indirect costs (transaction costs, slippage, bid-ask spread, liquidity impact, opportunity costs, and market trends) do not exist in the simulated environment.
Important facts about an ETF
- It is like an index fund but its units are bought and sold on a stock exchange
- It also copies an index in terms of its holdings and hence performance of ETF funds is similar to that of an index fund
- It is less risky, low cost due to low fund management charges
- Involve broker charges and you need a Demat account to transact
So, now it is time to get to business by hooking on to our main point of discussion, namely, Bharat 22 ETF fund.
What is Bharat 22 ETF?
Bharat 22 ETF was floated in the market with the purpose of raining money from the market through the disinvestment program of the government of India.
It is an open-ended exchange-traded fund that invests in stocks and in certain weightage assigned to each stock in a certain proportion as they appear Bharat 22 Index.
To explain in detail, the Government is going the ETF way to disinvest and meet its fiscal deficit target for the FY 2017-18 which is Rs.72000 cr. Out of which Rs. 9300 crore has been met to date.
As you know, an index will not give equal weightage to all the stocks. In this particular index, SBI would have 8.6% of weightage, ITC would have 15.2% of weightage, and L&T would have 17.1% of weightage while NTPC, ONGC, and would have 5 to 9% of weightage in this index.
This index would be managed by the ICICI Prudential Asset Management Company while the index will be provided by Asian Index.
So why the government is going this way through the direct disinvestment route which the government had adopted earlier by selling big stakes in PSUs, the stocks took a beating in the market and in this process also attracted a lot of rage of employees working in those PSUs.
The ETF would happen in tranches and would help the government to part small stakes in each of its holdings offer as a basket of 22 stocks.
Secondly, it has tried and tested this ETF way through its first ETF which is Central Public Sector Enterprise (CPSE) ETF which was heavy on energy stocks through which collected Rs.8500 cr.
Though the majority of the stocks are profitable and dividend-paying, the government is bundling some stocks which would rather have been tough for it to disinvest. So the government is resorting to an effective and smart way to disinvestment.
Lastly, ETFs are very popular worldwide and since the Indian Stock market is at an all-time high and the whole world wants to invest here, Bharat 22 ETF could be a great entry for them as well as for individual investors, or first-time investors in Indian Stock Market.
This way the government can attract investments in foreign currencies, Dollars in particular.
So, as an investor, you might be thinking “what is in it for me?”
To attract investors, the government could offer stocks at a discounted rate which it did earlier with CPSE ETF which was its first ETF. For Bharat 22 ETF price, check online share prices of Bharat 22 ETF as it varies over time.
Bharat 22 ETF NAV is 27.639 to 32.923.
So, if the index looks good, and the stocks too, you may run to own a slice. The long term savings managers invest generally in ETF globally.
So, if this happens with Bharat 22 then there is no reason why individual investors should stay away.
Important fact About 22
1. Bharat 22 ETF listing date
Bharat 22 ETF public offer for 2019 was launched on 3rd Oct 2019 for anchor investors and on 4th Oct 2019 for non-anchored investors.
2. Heads up on ETF investments
ETF is funds traded on the stock exchange. A fund is raised from the public in a pool. Companies that manage these funds are called Asset Management Companies (AMC).
AMC appoints Fund Managers. Based on the objectives and goals of the fund, the fund managers invest the money. The profit from the fund is distributed among the investors who invested in the fund.
To manage the funds, the AMC charges fees. The fees charged are called an Expense ratio.
3. Exchange-traded Fund
In cash markets, you will Indices such as Nifty, Sensex, Bank Nifty, etc. You cannot buy these indices because Nifty, Sensex, Nifty Bank, and other indices are not a stock or a fund.
They are just indices which share the current status of a stock market or of a specific sector. Nifty holds 50 top blue-chip companies of various sectors. Nifty index shares the status of the performance of those 50 companies.
All 50 companies included in Nifty have a good track record. Hence, by following the Nifty index, we come to know the overall status of the market while ETF is a fund that replicates an Index.
For example, Nifty holds 50 companies and each company has a different weightage. For instance, in November 2017, the HDFC bank had a weightage of 9.27%, while reliance Industries had 7.84% and ITC had 5.69%. Similarly, the rest of all 47 companies will have different weightage.
So Nifty ETF will buy the shares of these companies in accordance with the weightage assigned to them. In other words, Nifty will invest 9.27% of its total fund in HDFC, 7.84 will go to Reliance Industries, 5.69% investment will go to ITC.
Similarly, Nifty will invest and distribute its funds based on the weightage assigned to each company.
Here, Nifty ETF is mimicking the Nifty Index. The Nifty ETF will invest in the stocks in the same proportion as per the NIFTY weightage assigned to the companies.
The performance of NIFTY EFT will replicate the performance of the Nifty Index. The returns generated by Nifty and Nifty ETF will be the same. If Nifty goes up, Nifty ETF will also go up, if Nifty goes down, Nifty ETF will follow it.
ETF is traded the same as stocks are traded on the exchange. Due to demand-supply, the nifty ETF return does not exactly match the Nifty Index.
If Nifty gives a return of 25% in 2017, Nifty ETF may give a return of 24.9%. This difference is called tracking error. Lesser the tracking error, better the return as it will be very close to the Index return.
According to the fund management technique, there are two types of funds. Actively managed funds and passively managed funds. In actively managed funds, the fund manager does a lot of research and market study to pick up stock in your portfolio.
The objective of the fund manager is to maximize the return of investors of the funds according to the objectives and goals of the fund. Fund Managers by the stocks according to the proportion associated with them.
In a passively managed fund, the fund manager will share his insights while picking a stock. He will not do the due diligence by researching before picking the stock.
This is why the expense ratio of a passively managed fund is much lesser than that of an actively managed one. ETF is a passively managed fund, hence the expense ratio of ETFs are generally low.
The expense ratio is the annual fee of the fund. This is charged to recover the operating expenses, such as management fees, marketing expenses, compliance, and administrative expenses, etc. Even the advertising cost is also covered in the expenses.
Recently launched Bharat S&P BSE 22 is an ETF launched in August 2017. This has 22 companies, out of which 19 are public sector, or government-owned companies and 3 private companies.
All 22 companies have different weightage assigned to each company. L&T, ITC, and Axis bank, which are private companies, have 39% of weightage. The rest 19 Government organizations have 61% weightage.
ICICI Prudential Asset Management Company, Mr.Keyzad Eghlim, the fund manager of ICICI Pru AMC, would manage the Bharat 22 ETF.
If you hold an index Etf or a sector-specific ETF for less than 1 year, then you need to pay short term capital gain tax of 15% of your profit.
On the contrary, if you hold an index Etf or a sector-specific ETF for equal to or more than 1 year, you are not required to pay any tax from the profit booked.
Last but not least, you need to have a Demat account to invest in ETF.
4. Bharat 22 ETF investment process
To invest from the online trading platform, visit www.hdfcsec.com click on log in.
- Enter your Login credentials., register if you do not have one
- Select/go to IPO/ OFS Tab > IPO> Apply OR
- Select/Go to Mutual Fund > Current NFO> Select BHARAT 22 ETF and click on Purchase.
5. Is Bharat 22 ETF good investment
Bharat 22 ETF’s is an attractive investment that has features, such as low expense ratio of just 1 basis point, thus making it India’s cheapest ETF and a high dividend yield of 2.6% on its portfolio compared to the Sensex’s 1.14%.
6. Dividends & Bharat 22 ETF
Bharat 22 does not pay dividends or any bonus from those companies in Bharat 22 ETF even when they declare for themselves. ICICI Prudential AMC is selected by the Indian Government to manage BHARAT 22 ETF and they have not announced a dividend for the last several years.
7. Redeem my Bharat 22 ETF
Bharat 22 ETF is an ETF that is listed on the exchange. You can trade it on the exchange directly using your trading account that is mapped to the Demat account in which you hold the ETF units. You can sell it at the current price that is prevailing on the exchange at the time of selling.
8. Bharat 22 ETF the same as mutual funds
The fund managers do not take any sector or stock exposure into consideration for this ETF that is different from what constitutes the chosen index.
9. Bharat 22 ETF allotment status
Allotment process of Bharat 22 ETF is managed by ICICI Prudential you can check your Bharat 22 ETF allotment status from this link available on the website of ICICI Pru AMC.
To apply in Bharat 22 ETF, please visit the NFO section under IPO/ Mutual Fund page on www.icicidirect.com. Know more about Bharat 22 ETF IPO, you may contact for further queries or assistance write to [email protected] or call their Customer Care number.
Bharat 22 ETF Conclusion
Bharat 22 ETF accommodates 22 Blue-chip, stocks of the most sought after companies. Like any other ETF, it brings in the benefits of Low Fees and lowers expense ratios as it is not an actively managed scheme by fund managers.
You get exposed to 22 stocks of Maharatna PSUs with an investment amount starting at as low as 5,000.
You can diversify your Portfolio through Bharat 22 ETF by including stocks from the following six sectors – materials, energy, finance, FMCG, industrials and utilities.
You can add Blue-chip stocks in your portfolio comprised of stocks of some of the best companies in India.
Bharat 22 ETF FAQs
Q1.What is Bharat 22 ETF?
The government of India introduces Bharat 22 Exchange Traded Fund as a new initiative for the disinvestment program that comprising shares of listed Central Public Sector Enterprises (CPSE), some of the strategic holding of Specified Undertaking of Unit Trust of India (SUUTI) and other blue-chip corporate entities.
ICICI Prudential (ICICI Prudential AMC/the AMC) is responsible to create, launch and manage the Bharat 22 ETF. On August 4, 2017, a new ETF by the name “BHARAT 22 ETF” was launched and announced the index for BHARAT 22 ETF. BHARAT 22 ETF will invest in the equity securities of the underlying “S&P BSE Bharat 22 Index” companies in assigned composition and weightage as per the Index.
Q2. How do you invest in Bharat 22 ETF?
To invest from the online trading platform, visit www.hdfcsec.com click on log in.
- Enter your Login credentials., register if you do not have one
- Select/go to IPO/ OFS Tab > IPO> Apply OR
- Select/Go to Mutual Fund > Current NFO> Select BHARAT 22 ETF and click on Purchase.
Q3. How do you buy Bharat 22 ETF?
To invest from the online trading platform, visit www.hdfcsec.com click on log in.
- Enter your Login credentials., register if you do not have one
- Select/go to IPO/ OFS Tab > IPO> Apply OR
- Select/Go to Mutual Fund > Current NFO> Select BHARAT 22 ETF and click on Purchase.
Q4. How do you purchase Bharat 22 ETF?
To invest from the online trading platform, visit www.hdfcsec.com click on log in.
- Enter your Login credentials., register if you do not have one
- Select/go to IPO/ OFS Tab > IPO> Apply OR
- Select/Go to Mutual Fund > Current NFO> Select BHARAT 22 ETF and click on Purchase.
Q5. How do you apply for Bharat 22 ETF?
To apply in Bharat 22 ETF, please visit the NFO section under IPO/ Mutual Fund page on www.icicidirect.com. Know more about Bharat 22 ETF IPO, you may contact for further queries or assistance write to [email protected] or call their Customer Care number.
