InvestorQ : How is Bharat Bond ETF?
Shreya Mashelkar made post

How is Bharat Bond ETF?

Tisha Malhotra answered.
8 months ago
The Department of Investment and Public Asset Management, under the Ministry of Finance, has launched the third tranche of the Bharat Bond ETF to raise ₹5,000 crores. Also known as Bharat Bond ETF 2032, is the third after the launch of the first tranche in late 2019 and the second in July 2020 and is offering an estimated yield of 6.8%.

Similar to the previous two ETFs, this tranche of ETF is also managed by Edelweiss Asset Management. It is a target maturity ETF that tracks the performance of the Nifty Bharat Bond Index-April 2032, which includes AAA-rated PSU Bonds with a maturity of 12 months before the index’s maturity. Also available as an option of Funds-of-Funds, it comes with a modification duration of 6.74 years and no lock-in period for investors.

The Bharat Bond ETF 2032 can prove to be an ideal investment for individuals that are in the highest tax bracket as it can offer long-term capital appreciation. As Bharat Bond ETF 2032 only invests in AAA-rated central PSU securities for the long term, the ETF seems to be the safest investment option amid an uncertain rate trajectory. Furthermore, as the ETF has a defined maturity date, the remaining maturity of the portfolio will reduce every day, resulting in mitigating the market-related volatility on the earned returns.

The third tranche will launch on 3rd December, and we believe that investors would benefit from its benchmark, lower interest rate risk, and predictability of returns. Please make a note that it's a long-term product and matures in 2032. Also, interest rates do change and there is also volatility.