NFO: Edelweiss Bharat Bond 2032

By Morningstar |  01-12-21 | 

The third tranche of Edelweiss Bharat Bond 2032 ETF opens for subscription on December 3, 2021 and closes on December 9, 2021. The Scheme will track the constituents of the underlying index i.e., NIFTY BHARAT Bond Index – April 2032.

It will endeavor to hold bonds till their maturity with an aim to provide stable and predictable returns. The exposure to a single issuer is capped at 15% and the index is rebalanced quarterly.

“Bharat Bond ETFs are trading at a premium on the exchange, which indicates its higher demand. The unique feature about this product is target maturity structure in an open ended format, coupled with predictability of returns. It has been widely replicated in the industry. The introduction of passive debt funds has boosted demand for SDL bonds,” said Radhika Gupta, CEO, Edelweiss Mutual Fund.

The combined AUM of the earlier tranches of Edelweiss Bharat Bond ETFs stands at 36 359 crore as of October 2021.

Index Constituents: Indian Railway Finance Corporation, Power Finance Corporation, Power Grid, NTPC, NABARD, Export Import Bank of India, NHPC, Nuclear Power Corporation.

Exit Load: 0.10% if redeemed before 30 days of allotment

How to invest: Those who have demat account can invest through ETF while others can invest through the fund of fund.

Expense Ratio: 0.0005% per annum for the first Rs 10,000 crore AUM.

Taxation: Traditional Investments are taxed at 30% + 4% cess.  BHARAT Bond ETF – April 2032 returns are taxed at 20% + 4% Cess post indexation, just like any other debt fund.

Liquidity: You can buy or sell units of this fund on exchange anytime during the tenure of the fund. The fund has no lock-in period.

Return: If invested till maturity, the ETF can yield 6.37% on post-tax basis vis-à-vis 3.98% in a traditional fixed deposit.

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