Edelweiss Asset Management company on Thursday announced the public issue of India’s first Corporate Bond ETF (exchange trade fund) called the Bharat Bond ETF.

Through the ETF, Edelweiss Mutual Fund proposes to raise an initial amount of ₹3000 crore with a green shoe option of ₹2000 crore in the three-year maturity period (2023) and ₹4000 crore with a green shoe option of ₹6000 crore in the 10-year maturity bucket (2030), the Fund said in a statement.

The ETF, which is open for subscription from December 12 to December 20, will invest only in AAA rated bonds of Public Sector companies. The minimum unit size for investment is ₹1,000.

Government initiative

This 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 AMC to design and manage the product.

The ETFs will have target maturity structures. The ETF with a three-year maturity will follow the Nifty BHARAT Bond Index - April 2023 and the one with a 10-year maturity will follow the Nifty BHARAT Bond Index – April 2030.

As per the statement, the yield as on December 5, 2019 of Nifty BHARAT Bond Index — April 2023 is 6.69 per cent and Nifty BHARAT Bond Index — April 2030 is 7.58 per cent.

“The investors who hold these ETFs for over three years will get the benefit of capital gains with indexation. The ETF will invest in constituents of the NIFTY BHARAT Bond Indices, consisting of public sector companies,” the statement added. BHARAT Bond Funds of Funds (FOF) is also being launched for investors who do not have Demat accounts.

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