The second tranche of Bharat Bond exchange-traded fund (ETF) open for subscription today, with two new series having maturities of April 2025 and April 2031, catering to both short and long-term investment needs.
The government aims to raise Rs 3,000 crore, the base issue size, through Bharat Bond ETF, with a green-shoe option of Rs 11,000 crore.
The 25% of the issue is reserved for retail investors and the remaining 75% is available for subscription by retirement funds, QIBs and non-institutional investors. The minimum investment by retail investors is Rs 1,001 and in multiples of Re 1 thereafter. The issue, which closes on July 17, is managed by Edelweiss AMC.
Investors, who are in for long term and are risk-averse, can subscribe to the ETF but it is not advisable for investors who want to hold it for less than a year, analysts say, adding there is a certainty of returns and capital is safe.
Bharat Bond is a good investable products to consider if investors have an investment horizon matching the maturity dates of the ETF funds.
But if one has a 6 to 12-month horizon shorter period; these funds will not be suitable for a retail investor, as the returns will be volatile depending on short-term interest rate movement.
Bharat Bond ETF is believed to be an efficient debt product that provides easy access to retail investors to invest in bond markets and adequate liquidity on exchange with low bid-ask spreads that will eventually encourage investors to participate in the bond market, which is still at a nascent stage.
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