Finance Minister Arun Jaitley on Friday unveiled a new Exchange Traded Fund (ETF), Bharat 22, consisting of 22 stocks of Central Public Sector Enterprises (CPSE), Public Sector Banks (PSB) and strategic holding of Specified Undertaking of Unit Trust of India (SUUTI).
Compared to the energy-heavy CPSE ETF, Bharat 22 is a well diversified portfolio with six sectors, namely basic materials, energy, finance, FMCG, industrials and utilities. The Bharat 22 Index will be rebalanced annually, with ICICI Prudential AMC as the ETF Manager and Asia Index Private Limited as the Index Provider.
Announcing the Union Budget 2017-18, Jaitley had ensured the use of ETF as a vehicle for disinvestment of shares. The target for CPSE's disinvestment in 2017-18 was set at Rs 72,500 crore.
During the current financial year 2017-18, the government has realised around Rs. 9,300 crore through nine disinvestment transactions so far.
Globally ETF Assets have grown significantly. There are four trillion dollars worth Assets Under Management (AUM). These are expected to touch USD 7 trillion by 2021.
Large Investors prefer investing in ETFs due to the ETF being low cost and less risky, highly liquid assets, transparent investment and can be traded at Real Time Market Price
ETF has been a preferred instrument for investment by PF's following flexibility given to them by the government for their investments.
In the previous financial year, the government raised Rs.8500 crore by divesting through CPSE ETF.
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