New Exchange Traded Fund announced -Governance Now

New Exchange Traded Fund announced

Compared to energy heavy CPSE ETF, Bharat 22 is a well diversified portfolio with six sectors

GN Bureau | August 8, 2017

#CPSE #Arun Jaitley #exchange traded fund #Bharat 22 index #ICICI Prudential AMC

Finance minister Arun Jaitley has announced a new Exchange Traded Fund (ETF) — BHARAT 22 which consists of 22 stocks of CPSE’s, public sector banks and strategic holding of SUUTI.

Compared to energy heavy CPSE ETF, Bharat 22 is a well diversified portfolio with six sectors (basic materials, energy, finance, FMCG, industrials and utilities). Bharat 22 Index will be rebalanced annually. A PIB release said that ICICI Prudential AMC will be the ETF manager and Asia Index Private Limited (JV BSE and S& P Global) will be index provider.

In the 2017-18 budget speech, Jaitley had promised to use ETF as a vehicle for further disinvestment of shares. The target for CPSE’s disinvestment in 2017-18 was set at Rs 72,500 crore. During the current FY 2017-18, the government has realised approx Rs 9,300 crore through nine disinvestment transactions so far.

ETF assets have grown significantly across the world. Globally, today there are $4 trillion worth Assets Under Management (AUM). These are expected to touch $7 trillion by 2021. Large Investors prefer investing in ETFs due to the benefits of ETF being low cost and less risky; being highly liquid assets; Transparent Investment and that these can be traded at real time market price.

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