Edelweiss Mutual Fund today announced the launch of the fourth tranche of the BHARAT Bond ETF, after the successful launch of 5 ETFs in close to 3 years with an AUM of over 50,000 crore. The BHARAT Bond ETF is an initiative of the Government of India, from the Department of Investment and Public Asset Management, and the latter has given the mandate to Edelweiss Mutual Fund to design, launch, and manage the product. It is India's first corporate bond ETF.
ETF maturity
This new BHARAT Bond ETF and BHARAT Bond Fund of Funds (FOF) series will mature in April 2033. NFO will start on December 2, 2022, and end on December 8, 2022. Through the launch of this new series in the fourth tranche, the company proposes to raise an initial amount of Rs. 1,000 crore with a green shoe option of Rs. 4,000 crore. So far, five maturities of Bharat Bond ETFs have been launched - 2023, 2025, 2030, 2031, & 2032.
ETF investments
The ETF will invest in constituents of the NIFTY BHARAT Bond Indices, consisting of AAA rated public sector companies. BHARAT Bond ETF Fund of Funds (FOF) with similar maturities will also be launched for investors, who do not have Demat accounts. Edelweiss AMC is a leader in the Target Maturity Fund category and has reached an AUM of more than Rs. 60,000 crore (as on October 31, 2022) in close to 3 years through 11 product offerings across various maturity segments. These represent more than 50% of the total industry’s AUM in this category.
What are target maturity ETFs and index funds?
Target maturity ETFs and index funds are open-ended debt funds with a specified maturity date that aligns with the expiry date of the bonds they have in their portfolios. These funds are simple and transparent investment vehicles that allow investors to have liquidity, stability, and predictability of returns, along with lower tax compared to traditional instruments like fixed deposits. The funds invest only in constituents that are eligible as per the index methodology and investment objective of the schemes.
Tuhin Kanta Pandey, Secretary, DIPAM, Ministry of Finance, said, “' BHARAT Bond has created a unique opportunity for all Indian investors to invest in PSU Bonds and fuel India’s growth story. Crossing a landmark of Rs. 50,000 crore AUM is a testament that BHARAT Bond has emerged as a trusted investment avenue with better tax efficiency for many Indian investors.”
Radhika Gupta, MD & CEO, Edelweiss Mutual Fund, said, “Target Maturity Fund category is growing at an exciting pace post the launch of Edelweiss MF’s Bharat Bond ETF. Investing in long-term debt has been brought to the forefront by these funds. BHARAT Bond ETF now has six maturities – from 2023 to 2033, which will allow investors to select the right maturity as per their investment goals.”
