The further fund offer (FFO) of Bharat-22 exchange-traded fund (ETF) has been opened for subscription by non-anchor investors on Wednesday. The subscription offer will remain open till June 22. The government had on June 19 launched the second tranche of the ETF and was open for subscription by retail investors on the first day. Through the follow on offer, the government aims to raise Rs 6,000 crore from the markets. A green-shoe option to retain another Rs 2,400 crore from the second tranche of the offering has been kept. Investors in the fund would get a 2.5 per cent discount over the issue price.
Top constituents of Bharat 22 index
The top 10 constituents of Bharat 22 ETF with weightage (as on May 31, 2018) are: Larsen & Toubro (15.82%), ITC (15.32%), State Bank of India (8.87%), Axis Bank (8.78%), NTPC (7.71%), Power Grid Corporation of India Ltd (6.95%), ONGC (5.97%), NALCO (5.47%), Coal India (4.58%) and GAIL India Ltd (4.54%).
Background of Bharat 22 ETF
Bharat 22 ETF was announced by Finance Minister Arun Jaitley on August 4, 2017 and has been launched in line with the intent of the Government as presented in the Budget 2017. A special index S&P BSE BHARAT-22 Index — a blend of shares of key CPSEs, public sector banks (PSBs) and government-owned shares in bluechip private companies like L&T (L&T), Axis Bank and ITC — was created on the BSE.
Bharat 22 ETF scheme objective
The Bharat 22 ETF scheme’s objective is to invest in the constituents of the underlying Index in the same proportion as in the underlying index. It also endeavors to provide returns before expenses, which closely correspond to the total returns of the underlying Index.
What experts say about investing in Bharat 22 ETF
Markets experts bet on good returns from the fund in the long run. “For long term investors we would advice investing in the fund since there are attractive features such as upfront discount of 2.5 percent, very low charge of 1 bp, highly diversified portfolio of stocks and bluechips like ITC, L&T, Axis Bank etc in the portfolio. Long-term investors with a 3-year time horizon can expect good returns,” V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, told FE Online.