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Bharat 22 ETF

Home Mutual Fund Bharat 22 ETF
Updated: 09-01-2024 09:22:36 AM

 

Launched in November 2017, Bharat 22 ETF tracks performance of the Bharat 22 Index, which comprises of 19 public sector units and 3 privately owned companies. This foundation was laid by the government in the Union Budget of 2017 as a medium to achieve its targets of disinvestment. Bharat 22 Index remains the top choice of the government’s current disinvestment plans.

The Indian government plans to raise Rs. 3500 crore through this additional offering managed by ICICI Prudential Asset Management Co. Ltd. Investors who subscribe to Bharat 22 ETF will be offered an additional discount of 5% on the reference price. This amount can be calculated as the volume weighted average price of its constituents on the offer date.

  • Inception: November 24, 2017
  • Assets under Management: Rs. 8422 crore (as on June 30, 2019)
  • Category: Equity: Large Cap
  • Fund Manager: Kayzad Eghlim
  • Benchmark: S&P BSE Bharat 22 TRI
  • Expense Ratio: 0.01% (as on June 30, 2019)

Advantages of Bharat 22 ETF

Key features of Bharat 22 ETF
Bharat 22 ETF Investment Objective

Key features of Bharat 22 ETF

Exchange Traded Funds are marketable securities that track a specific commodity, bonds, index or a combination of assets such as the Index fund.

  • ETF units witness real time price changes as they can be traded on stock markets similar to shares
  • Unlike shares which represent investment in a specific company, Bharat 22 ETF, an Index Fund offers superior diversification
  • ETF provides intra-trading option and allows limit order and stop order trades
  • Bharat 22 ETFs can also be used as collateral similar to securities (loan against securities)
  • ETFs are held through a Demat account and can be traded on the stock exchange like direct equity shares.
  • Since ETFs are passively managed, they have lower expense ratio in comparison with actively managed mutual funds
  • Being a government backed scheme, there are low levels of risk, while the ability to make intraday trades makes it one of the most liquid investments in the equity sector
  • Since the ETF is managed by ICICI Prudential Mutual Fund, which is one of India’s leading AMC, the investments made in this fund are considered reliable
  • Out of the 22 company securities held by the Bharat 22 ETF, a majority are part of the BSE Large Cap Index; thus the ETF is expected to have a large cap orientation
  • Bharat 22 ETF features a lower expense ratio as compared to actively managed mutual funds

Also Read: Bharat Bond ETF

Bharat 22 ETF Investment Objective

The Bharat 22 ETF would mirror the performance of the Bharat 22 Index therefore it would invest in equities of the 22 companies that comprise its chosen index. The capital allocation to individual company equity by the ETF is expected to be the same as the individual weight of each company featured on the Bharat 22 Index. Any variations between the Index returns and the fund returns would be a result of tracking error.

Constituents of the underlying index (S&P BSE Bharat 22 index)

The Bharat 22 Index comprises of 22 stocks of Central Public Sector Enterprises (CPSE), Public Sector Banks and private companies which are Strategic Holding of Specified Undertaking of Unit Trust of India (SUUTI), spread across six sectors (Basic Materials, Energy, Finance, FMCG, Industrials and Utilities). The index invests a maximum of 15 per cent in a single stock and 20 per cent in a particular sector.

S&P BSE Bharat 22 Index Constituents
Company Sector % Assets
Larsen & Toubro Construction 16.33
ITC FMCG 13.21
State Bank of India Financial 10.16
Axis Bank Financial 8.60
NTPC Energy 7.53
Power Grid Corporation Energy 6.44
ONGC Energy 6.10
Coal India Energy 4.79
GAIL Energy 4.50
Indian Oil Corp Energy 4.49
BPCL Energy 4.01
National Aluminium Metals 3.96
Bharat Electronics Engineering 2.66
NBCC India Construction 1.54
Bank of Baroda Financial 1.16
REC Financial 1.10
Engineers India Construction 0.92
Power Finance Corp Financial 0.85
NHPC Energy 0.80
Indian Bank Financial 0.22
NLC Energy 0.20
SJVN Energy 0.16

The above numbers have been recorded as of June 3o, 2019 (Source: Value Research).

The relative capital allocation of the fund to each sector would be dependent on the weight assigned to individual securities featured on the index. These weights are rebalanced annually.

How to invest in Bharat 22 ETF?

Bharat 22 ETF is intended for investors who look for long term wealth creation through a diversified portfolio. The scheme has a lock-in period of 30 days from the date of allotment for anchor investors. For the others, including retail investors retirement funds, qualified institutional buyers and non-institutional investors, there is no lock-in period.

The FFO was last opened for subscription from June 20 to June 22, 2018 for retail investors. The applications can be submitted via both online and offline mediums. For offline subscriptions, the applications can be submitted to any of the ICICI Prudential AMC  or CAMS service centre. Online subscriptions can be submitted on the ICICI Prudential website, IPRUTOUCH mobile application or other platforms like BSE Star MF, MF Utility, CAMSonline.com, etc.

It is important for one to have Demat account before investing in ETFs. However, the fund house has launched a Fund of Funds (FOF) scheme based on Bharat 22 ETF by the name of ICICI Prudential Bharat 22 FOF for the benefit of retail investors without a Demat account. The minimum application amount for retail investors is Rs. 5000 while the maximum amount is Rs. 2 Lakh.

Tax Implications

Profits from ETF investments are subject to short term capital gains and long term capital gains. The taxation treatment for Bharat 22 ETF is in line with other equity mutual fund schemes. Short-term capital gains held for upto 1 year are taxed at 15% plus surcharge and cess, as applicable. On the other hand, long-term capital gains held for more than more than a year, with gains exceeding Rs. 1 lakh, are taxed at 10%.

Tax Exemptions

This year’s budget announced that the government will offer an investment option in CPSE related ETFs, on the lines of Equity Linked Saving Schemes. ELSS are equity-oriented mutual funds with a lock-in period of 3 years and are eligible for 80C benefits.

Hereafter, under section 80C of the Income Tax Act, the investments made in ETFs will be eligible for exemption from tax for upto 1.5 lakh and will be subject to a lock-in period for 3 years.

Over subscription and Under Subscription

In case the FFO or Further Fund Offer is oversubscribed, the units of FFO will be allotted in proportion to the amount of the applications received. On the other hand, in the case of under subscription, all the units applied shall be allotted. Moreover, if there is any refund amount, in case of oversubscription or unsuccessful application, it will be directly credited to the registered bank account.

The maximum amount raised by Bharat 22 ETF shall be alloted as-

Anchor investors: Not exceeding 25% of ‘Maximum Amount to be Raised’

Non-Anchor investors:

  • RIIs- Not exceeding 25% of ‘Maximum Amount to be Raised’
  • RFs – Not exceeding 25% of ‘Maximum Amount to be Raised’
  • QIBs and NIIs- Not exceeding 25% of ‘Maximum Amount to be Raised’

The units of Bharat 22 ETF get listed on BSE and NSE within 5 working days from the date of allotment. Once listed, the units can be freely traded on the stock exchange like direct equity shares.

Bharat 22 ETF Second Tranche Witnesses Oversubscription on Day 1

High levels of interest by institutional investors groups including mutual fund houses, retirement funds and foreign portfolio investors have led to oversubscription by anchor investors in the second tranche of the ICICI Pru MF managed Bharat 22 ETF. The target subscription value for the current Bharat 22 ETF was fixed at Rs. 6,000 crores with Rs. 1,500 crores reserved for anchor investors of the scheme. As of now, anchor investor subscriptions worth an estimated Rs. 5,163 crores have already been received which is 3.44 times the original subscription amount reserved for this investor group.       

ICICI Prudential to open Bharat 22 ETF on November 14th

As per an Economic Times article, ‘Bharat 22’ Exchange Traded Fund, a New Fund Offer (NFO) managed by ICICI Prudential Mutual Fund is going to be in the market this November. Subscription to the fund will open on November 14th for anchor investors and on November 15th for retail investors and will last till November 17th.


Introductory Offer of Bharat 22 ETF 

As an introductory offer from ICICI Prudential Mutual Fund, the ICICI Prudential Bharat 22 ETF is being offered to NFO investors at a discount of 3%. This introductory benefit can be availed by all investors groups irrespective of how much they are investing.


Bharat 22 ETF – The Best Way to Invest in Indian PSUs

The Bharat 22 ETF is set for launch by ICICI Prudential Mutual Fund AMC (Asset Management Company) on the 15th of November and this NFO is expected to be worth an estimated Rs. 8000 crores. The size of the NFO aside, those opting for the IPO are receiving a 3% discount on the issue price till the 17th of November 2017. As an investment, the Bharat 22 ETF stocks is different because it allows investors to invest in the top 22 Indian PSUs featured in the Navratna, Maharatna, SUUTI and Mini Ratna categories at attractively low valuations. What’s more, those worried about diversified need not fret as the companies featured in the ETF operate across 6 key sectors namely basic materials, financial, energy, utilities, FMCG and industrials.


Bharat 22 ETF NFO Receives Day 1 Subscriptions worth Rs. 12,000 Crores

The Bharat 22 ETF new fund offer (NFO) from ICICI Prudential Mutual Fund has received subscriptions valued at Rs. 12,000 crores on its very first day according to a news report published by Livemint. The ETF’s NFO was opened to investors on Tuesday, the 14th of November with anchor investor reservation of Rs. 2,000 crores. So in effect the Bharat 22 ETF has received 6 times the anchor investor reservation amount at the end of the first day itself, the Livemint report has pointed out. The NFO of this scheme will be open to retail investors till the 17th of November 2017. The Bharat 22 ETF invests in 22 leading public sector companies suitable for disinvestment and is expected to help the government meet its current Rs. 72,500 crores disinvestment target.

BSE StAR MF Emerges as Main Platform for Bharat 22 ETF NFO 

During the recently concluded Bharat 22 ETF NFO, the BSE StAR MF platform has emerged as the major contributor having processed approximately 90% of all the NFO investment requests. The launch of the ICICI Prudential Mutual Fund AMC managed Bharat 22 ETF is believe to be a major step forward in the current government’s disinvestment plans. The NFO of this new scheme has garnered an estimated Rs. 14,500 crores which is huge step towards achieving the proposed Rs. 72,500 crores disinvestment target proposed by the government. Key contributors towards the Bharat 22 ETF include HDFC Ergo Insurance, EPFO, SBI Pension Fund, Bank of India and Life Insurance Corporation of India.

Bharat 22 ETF FAQs

Q. Who will manage the Bharat 22 Exchange Traded Fund?

Ans – As per the instructions provided by the Government of India, Mr. Kayzad Eghlim, a fund manager from ICICI Prudential Mutual Fund AMC will manage the Bharat 22 ETF.

Q. Who should invest in Bharat 22 ETF?

Ans- The Bharat 22 ETF scheme is specifically targeted at investors seeking to invest in leading Indian public sector enterprises. These investors are ideally seeking long term capital appreciation on their investments.


Q. Is there any lock-in period for Bharat 22 ETF?

Ans- In case of anchor investors, the Bharat 22 ETF features a lock-in period of 30 days counted from the day of unit allotment. In case of other investors both individual and institutional, there is no lock-in period and they can freely engage in intra-day trading.

Q. How to invest in Bharat 22 ETF?

Ans- After completion of the Bharat 22 ETF on the 17th of November, ETF units will be available for investment only through the stock market after the fund is listed. During the NFO period, applications for purchase would be accepted through various online platforms such as CAMS Online, IPRUTOUCH, MF Utility, BSE Star MF etc. Paper applications for investment into the scheme can be submitted through any registered service centres of CAMS and ICICI Prudential Mutual Fund AMC.  Prospective investors have to mandatorily maintain a demat account in order to purchase this ETF.


Q. When are the units allotted to the Customer? How?

Ans- Prospective investors who have successfully subscribed to this ETF are expected to receive their units 5 days after completion of the NFO period. The units will be provided in dematerialised format and credited directly to the investor’s Demat account as per details provided on the investment application form.


Q. What happens in the case of oversubscription or under subscription?

Ans-  If the ETF was undersubscribed, only units that were applied for would be allocated to the investors. However on the 1st day itself, the anchor investor requirement of Rs. 2000 crores was oversubscribed 6 times over i.e. to the tune of Rs. 12,000 crores. In case of oversubscription, the unit allocation would be made based on a predetermined formula as follows:

  • Anchor investors would receive units equal in value to no more than 25% of the maximum amount to be raised by the scheme.
  • Non-anchor investors including RIIs, RFs and QIBs/NIIs would each receive units valued up to 25% of maximum amount to be raised by the ETF.

Q. How can I liquidate my investments in Bharat 22 ETF?
Ans- In case you are an anchor investor, you have to wait 30 days from the date of unit allotment before you can liquidate your investment. The Bharat 22 ETF will be listed on stock exchanges 5 days after closure of the NFO and can then be freely traded like any other equity stock listed on the exchange.

Fund Name 1 Year Return 3 Year Return 5 Year Return
Axis Bluechip Fund – Direct Plan 22% 21% 11%
Mirae Asset Tax Saver Fund – Direct Plan 18% 20% –
Axis Midcap Fund – Direct Plan 18% 19% 12%
Axis Bluechip Fund – Growth 21% 19% 10%
Axis Long Term Equity Fund – Direct Plan 18% 18% 12%
Invesco India Growth Opportunities Fund – Direct Plan 14% 18% 12%
Axis Midcap Fund – Growth 16% 18% 10%
Mirae Asset Tax Saver Fund – Regular Plan 16% 18% –
Mirae Asset Emerging Bluechip Fund – Growth 16% 17% 16%
Kotak India EQ Contra Fund – Direct Plan 14% 17% 11%
Canara Robeco Bluechip Equity Fund – Direct Plan 18% 17% 10%
HDFC Index Sensex – Direct Plan Growth 18% 17% 9%
Nippon India Index Fund Sensex Plan – Direct Growth 18% 17% 8%
Mirae Asset Large Cap Fund – Direct Growth 16% 17% 13%
Tata Index Sensex Direct Plan 18% 17% 9%
Axis Small Cap Fund – Direct Plan 23% 16% 13%
IIFL Focused Equity Fund – Direct Plan 29% 16% 12%
JM Multicap Fund – Direct Plan 19% 16% 11%
Axis Long Term Equity Fund – Growth 17% 16% 11%
JM Tax Gain Fund – Direct Plan 16% 16% 11%
Invesco India Growth Opportunities Fund – Growth 13% 16% 10%
Canara Robeco Bluechip Equity Fund – Regular Plan 16% 16% 9%
Canara Robeco Equity Diversified – Direct Plan 14% 16% 9%
Canara Robeco Equity Diversified – Regular Plan 13% 16% 8%
DSP Equity Fund – Direct Plan 20% 15% 10%
JM Tax Gain Fund – Growth 16% 15% 10%
Kotak India EQ Contra Fund – Growth 12% 15% 9%
Mirae Asset Hybrid Equity Fund – Direct Growth 15% 15% NA
Tata Retirement Savings Fund Moderate Plan – Direct Growth 13% 15% 13%
Mirae Asset Emerging Bluechip Fund 18.27% 14.40% 17.53%
Axis Small Cap Fund – Growth 21% 14% 12%
IIFL Focused Equity Fund – Growth 27% 14% 11%
DSP Equity Fund – Regular Plan 19% 14% 9%
Aditya Birla Sun Life Tax Relief 96 – Direct Growth 9% 14% 12%
Invesco India Mid Cap Fund – Direct Plan 6% 13% 11%
Invesco India Infrastructure Fund – Direct Plan 12% 13% 7%
L&T India Large Cap Fund – Direct Growth 16% 13% 8%
DSP Equity & Bond Fund – Direct Growth 17% 12% 11%
SBI Small Cap Fund 8.33% 11.28% 17.04%
Canara Robeco Emerging Equities Fund 10.38% 11.25% 13.89%
Tata Mid Cap Growth Fund – Regular Plan 10% 11% 9%
Invesco India Infrastructure Fund – Growth 10% 11% 6%
LIC MF Infrastructure Fund – Direct Plan 15% 11% 5%
HDFC Index Sensex Fund – Growth -2% 11% 8%
ICICI Prudential Equity & Debt Fund 8.11% 10.41% 10.65%
ICICI Prudential Balanced Advantage Fund 12.79% 10.40% 10.37%
LIC MF Infrastructure Fund – Growth 13% 10% 4%
HDFC Hybrid Equity Fund 9.44% 9.50% 10.22%
PGIM India Dynamic Bond Fund 13.69% 9.32% 10.08%
SBI Magnum Medium Duration Fund 11.77% 9.31% 9.80%
Kotak Asset Allocator Fund 11.09% 9.29% 9.12%
Franklin India Dynamic Accrual Fund 9.51% 9% 9.98%
DSP Natural Resources and New Energy Fund – Direct Plan 0% 9% 11%
Kotak Emerging Equity Scheme 11.35% 8.38% 12.89%
ICICI Prudential All Seasons Bond Fund 11.28% 8.24% 9.91%
Aditya Birla Sun Life Balanced Advantage Fund 9.99% 8.20% 9.46%
Nippon India Small Cap Fund (earlier Reliance Small Cap Fund) -2.60% 8.14% 11.82%
DSP Natural Resources and New Energy Fund – Regular Plan -1% 8% 11%
Motilal Oswal Multicap 35 Fund – Regular Growth -10% 8% 15%
ICICI Prudential Bluechip Fund – Growth -6% 8% 9%
Tata Retirement Savings Fund Moderate Plan – Regular Growth -8% 8% 12%
Axis Strategic Bond Fund 8.32% 7.68% 9.11%
SBI Magnum MultiCap Fund – Growth -5% 7% 12%
L&T Tax Advantage Fund – Growth -13% 7% 9%
Aditya Birla Sun Life Tax Relief 96 – Growth -13% 7% 11%
L&T India Value Fund – Growth -13% 6% 11%
DSP Equity Opportunities Fund – Growth -8% 6% 10%
SBI Bluechip Fund – Growth -6% 5% 10%
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