Bharat-22 ETF

Why in News?

The Finance Ministry may come out with an Rs 10,000-crore follow-on fund offer of the Bharat-22 exchange-traded fund (ETF).

 

FACTS FOR PRELIMS

Bharat-22

The Union Government launched BHARAT-22 Exchange Traded Fund (ETF) managed by ICICI Prudential Mutual.

Bharat 22 Index comprises of 22 stocks including those of central public sector enterprises (CPSEs), public sector banks (PSBs) and its holdings under the Specified Undertaking Unit Trust of India (SUUTI)

Exchange Traded Fund

Exchange Traded Funds (ETFs) are mutual funds listed and traded on stock exchanges like shares. Index ETFs are created by institutional investors swapping shares in an index basket, for units in the fund.

The Bharat 22 ETF  allows the Government to park its holdings in selected PSUs in an ETF and raise disinvestment money from investors at one go. It tracks the specially made S&P BSE Bharat 22 Index, managed by Asia Index Private Limited. This index is made up of 22 PSU stocks and with a few private sector companies.

Significance

The BHARAT-22 ETF is expected to benefit long-term and retail investors by providing an opportunity for participation in equity stocks of Government run companies and earn stable returns. It will help to speed up Government’s disinvestment programme budgeted to raise a record Rs 72,500 crore in the FY2018.

 

Source-The Economic Times.