A Guide To Investing In Bharat 22 Etf

Bharat 22 ETF is an open-ended exchange-traded fund (ETF) that was launched in November 2017 by the Indian government to achieve its divestment target. The fund is managed by ICICI Prudential AMC and seeks to mirror the performance of the S&P BSE Bharat 22 Index, which is made up of 22 stocks from Central Public Sector Enterprises (CPSE), Public Sector Banks, and private companies across six sectors. Bharat 22 ETF offers investors long-term wealth creation through a diversified portfolio, with no lock-in period for most investors. With a low expense ratio and government backing, it is considered a reliable and liquid investment option. To invest in Bharat 22 ETF, individuals can submit applications online or offline during the subscription period, although a Demat account is typically required.

What is Bharat 22 ETF?

Bharat 22 ETF is an open-ended exchange-traded fund (ETF) that was founded by the Government of India in the Union Budget 2017 as a vehicle to achieve its divestment target. ETFs are open-ended mutual fund schemes that aim to track and reflect the performance of their underlying index. They do this by investing in the same stocks and in the same proportion as the underlying index.

The underlying index for the Bharat 22 ETF is the S&P BSE Bharat 22 Index, which is made up of 22 stocks from Central Public Sector Enterprises (CPSE), Public Sector Banks, and private companies that are Strategic Holdings of the Specified Undertaking of Unit Trust of India (SUUTI). These 22 stocks are spread across six sectors: Basic Materials, Energy, Finance, FMCG, Industrials, and Utilities. The index invests a maximum of 15% in a single stock and 20% in a particular sector, with weights being rebalanced annually.

The Bharat 22 ETF is managed by ICICI Prudential AMC, with Kayzad Eghlim as the fund manager. The ETF is intended for investors seeking long-term wealth creation through a diversified portfolio of high-quality public sector undertakings. There is no lock-in period for retail investors, retirement funds, qualified institutional buyers (QIBs), and non-institutional investors (NIIs). However, there is a 30-day lock-in period for anchor investors.

The ETF's taxation treatment is in line with other equity mutual fund schemes in India. Short-term capital gains (up to one year) are taxed at 15% plus surcharge and cess, while long-term capital gains (over one year) are taxed at 10% if gains exceed Rs 1 lakh.

How to invest in Bharat 22 ETF?

How to Invest in Bharat 22 ETF

Bharat 22 ETF is an exchange-traded fund (ETF) that was launched by the Indian government in November 2017 to achieve its divestment targets. The ETF is designed to mirror the performance of the S&P BSE Bharat 22 Index, which is made up of 22 stocks from Central Public Sector Enterprises (CPSE), Public Sector Banks, and private companies across six sectors: Basic Materials, Energy, Finance, FMCG, Industrials, and Utilities.

To invest in the Bharat 22 ETF, you will need to have a Demat account. You can then invest through various online platforms, such as:

• ICICI Prudential website
• IPRUTOUCH mobile application
• BSE Star MF
• MF Utility
• CAMSonline.com

You can also invest offline by submitting applications to any ICICI Prudential AMC or CAMS service centre.

The minimum application amount for retail investors is Rs. 5,000, while the maximum is Rs. 2 lakh. The ETF is intended for investors seeking long-term wealth creation through a diversified portfolio of high-quality public sector undertakings.

It is important to note that there is a lock-in period of 30 days from the date of allotment for anchor investors. However, there is no lock-in period for other investors, including retail investors, retirement funds, qualified institutional buyers, and non-institutional investors.

Bharat 22 ETF investment objective

The Bharat 22 ETF is an open-ended exchange-traded fund (ETF) that was established by the Government of India in the Union Budget 2017 to achieve its divestment target. The investment objective of the scheme is to invest in constituents of the underlying index—the S&P BSE Bharat 22 Index—in the same proportion and to provide returns that closely correspond to the total returns of the underlying index.

The S&P BSE Bharat 22 Index is designed to measure the performance of select companies disinvested by the Central Government of India according to its disinvestment program. The index is made up of 22 stocks of Central Public Sector Enterprises (CPSE), Public Sector Banks, and private companies, which are Strategic Holdings of the Specified Undertaking of the Unit Trust of India (SUUTI). These 22 stocks are spread across six sectors: Basic Materials, Energy, Finance, FMCG, Industrials, and Utilities. The index invests a maximum of 15% in a single stock and 20% in a particular sector, with weights being rebalanced annually.

The Bharat 22 ETF is passively managed and is mandated to invest at least 80% of its assets in large-cap stocks at all times. As of 30 September 2023, the fund had invested 99.93% in equity and 0.07% in cash and cash equivalents. The fund's holdings are mostly in large-cap stocks and debt instruments, indicating a conservative investment strategy.

The Bharat 22 ETF is intended for investors seeking long-term wealth creation through a diversified portfolio that is largely comprised of high-quality public sector undertakings. There is no lock-in period for retail investors, retirement funds, qualified institutional buyers (QIBs), and non-institutional investors (NIIs). However, there is a 30-day lock-in period for anchor investors.

Bharat 22 ETF scheme features

Bharat 22 ETF is an open-ended exchange-traded fund (ETF) that was established by the government in the Union Budget 2017 as a vehicle to achieve its divestment target. ETFs are open-ended mutual fund schemes that aim to track and reflect the performance of their underlying index through a passive investment strategy.

The S&P BSE Bharat 22 Index, which the ETF is based on, is designed to measure the performance of select companies disinvested by the Central Government of India as part of its disinvestment program. The index is made up of 22 stocks from Central Public Sector Enterprises (CPSE), Public Sector Banks, and private companies, which are Strategic Holdings of Specified Undertaking of Unit Trust of India (SUUTI). These stocks are spread across six sectors: Basic Materials, Energy, Finance, FMCG, Industrials, and Utilities.

The ETF's investment objective is to invest in the constituents of the underlying index in the same proportion and endeavour to provide returns that closely correspond to the total returns of the underlying index. It is mandated to invest at least 80% of its assets in large-cap stocks at all times and has no lock-in period. The fund's holdings are mostly in Large Cap stocks and debt instruments, indicating a conservative investment strategy.

The ETF is managed by ICICI Prudential AMC, with Kayzad Eghlim as the fund manager. It has a very high-risk rating and an expense ratio of 0.05.

Bharat 22 ETF tax implications

The taxation treatment for Bharat 22 ETF is in line with other equity mutual fund schemes in India. Short-term capital gains (STCG) are taxed at 15 per cent plus surcharge and cess as applicable. STCG refers to gains on investments held for up to one year. Long-term capital gains (LTCG) are taxed at 10 per cent, but only if the gains exceed Rs 1 lakh. LTCG refers to gains on an investment held for more than one year.

Dividends are added to the income of the investors and taxed according to their respective tax slabs. If an investor's dividend income exceeds Rs. 5,000 in a financial year, the fund house also deducts a TDS of 10 per cent before distributing the dividend.

There is no tax to be paid as long as you continue to hold the units.

Frequently asked questions