The fourth tranche of Bharat Bond ETF opens from today. What you need to know

This new Bharat Bond ETF and Bharat Bond Fund of Fund (FOF) series will mature in April 2033. Through the launch of this new series in the fourth tranche, the government proposes to raise the initial amount 1,000 crore with a green shoe option of Rs. 4,000 crores.

An initiative of the Central Government, Bharat Bond ETF invests only in ‘AAA’-rated bonds of public sector companies. The funds raised will be used by Central Public Sector Enterprises (CPSEs) to undertake capital expenditure. It also helps them to meet their capital expenditure needs.

So far five maturities of Bharat Bond ETF – 2023, 2025, 2030, 2031 and 2032 have been launched. 50,000 crore-mark.

Bharat Bond ETFs offer high certainty of returns (if held till maturity) along with high safety of capital as it invests in AAA rated public sector bonds owned by the government. “Bond ETFs will enjoy tax benefits in the form of indexation benefits similar to debt mutual funds (20% with indexation). While the actual tax implication depends on the future inflation index, the indicative yield after tax could be ~6.9%,” ICICI Securities said in a note.

Edelweiss Asset Management Company (AMC) is the Fund Manager of the scheme and the fund house has also launched ‘Fund of Funds’ (FOF) for this ETF to facilitate retail investors to buy/sell like normal mutual funds.

,Bharat Bond ETF Since its launch, the program has received an encouraging response from all categories of investors. Bharat Bonds have created a unique opportunity for all Indian investors to invest in PSU bonds and fuel India’s growth story,” said Tuhin Kanta Pandey, Secretary, DIPAM, Ministry of Finance.

In December last year, the government launched the third tranche with a base issue size of 1,000 crores. It was over-subscribed 6.2 times with bids 6,200 crores is coming. ETF picked up 29,600 crore in three offerings so far.