Bharat Bond ETF - Definition & Meaning (2024)

FAQs

Bharat Bond ETF - Definition & Meaning? ›

Bharat Bond ETF is India's first corporate bond exchange-traded fund (ETF), offering investors a diversified portfolio of high-quality public sector bonds.

Bharat Bond ETF offers inflation-beating returns and tax benefits. It invests in debt securities, managed by Edelweiss AMC. Retail investors can purchase ETFs for Rs. 1,000 with minimal expense ratio. Returns history and advantages like liquidity, capital safety, and tax efficiency make it appealing.

Debt Exchange Traded Funds (ETFs) are simple investment products that allow the investors to take an exposure to the fixed income securities. These debt ETFs combine the benefits of debt investments with the flexibility of stock investment and the simplicity of mutual funds.

A bond ETF is an exchange-traded fund that owns a portfolio of bonds. Typically an ETF tracks a specific index of securities such as bonds, making it a passively managed investment, rather than trying to actively manage a bond portfolio to beat a benchmark index.

Target maturity

Presently, there are 6 BHARAT Bond ETFs which mature at 6 different points in the future: April 2023, April 2025, April 2030, April 2031, April 2032, April 2033. Hence, each BHARAT Bond ETF invests in bonds that mature around the same time as the ETF maturity.

The NAV of BHARAT Bond ETF - April 2025 is ₹1,237.9891 as of 16-Sep-2024.

What is the current NAV of BHARAT Bond ETF - April 2030? The NAV of BHARAT Bond ETF - April 2030 is ₹1,411.3399 as of 17-Sep-2024.

In other words, bond ETFs are at risk if the borrower defaults as this means they may not pay the entire amount of the bond back. While there is no debt to an equity ETF, the underlying companies can still incur losses and lose value.

Types of Government Bonds in India

GOI Savings Bond: Offering a current interest rate of 8.05% till 31st December 2023, the GOI Savings Bonds are backed by the government, making them a stable and reliable investment. These bonds are ideal for those focused on capital preservation and desiring a steady income stream.

From the above table, it is clear that returns from INDY are quite low, and the expense ratio and tracking error are quite high when compared to Indian ETF and index funds. Thus, it is rather beneficial to invest in Indian ETFs or index funds directly rather than investing in US ETFs that track Indian indices.

Is it better to buy bonds or bond ETFs? ›

Bond ETFs often have lower expense ratios than bond funds. This is because ETFs have passive management. Bond funds may have higher expenses because of the active management and the costs associated with mutual fund operations.

Interest rate risk: Like individual bonds, Bond ETFs are subject to interest rate risk. When interest rates rise, bond prices typically fall, and this can lead to capital losses for investors in bond ETFs. The degree of interest rate risk depends on the duration of the bonds held in the ETF's portfolio.

Bharat bonds are easily traded on the market and are listed on the stock exchange - Instant liquidity is guaranteed. You have the freedom to sell your bond at any moment and receive the current market price.

The symbol of Bharat Bond ETF - April 2032 is BBETF0432.

Kiran, the Bharat Bond ETFs are part of the non-cash component list. You are checking the list for cash component securities.

Government Bonds are one of the most secure forms of investment in India attributed to its Sovereign guarantee. Risk-averse investors who prefer superlative security of their investments devoid of uncertainty created present in market-linked instruments can look to invest in this type of securities.

Conversation. Kiran, the Bharat Bond ETFs are part of the non-cash component list. You are checking the list for cash component securities.

FAQ for BHARAT Bond ETF FOF - April 2032 - Regular Plan

Being a fund of funds, it invests its assets in a set of mutual fund schemes instead of the underlying securities directly. Upon the completion of the stated tenure, the fund will be wound up and money will be returned to investors along with accumulated gains.

Whereas bail refers to money or another form of property provided by a court, a bond is a type of agreement between a court and defendant that can involve a range of types of bonds.