X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Should You Invest In Bharat-22 ETF? Know Here... - Outside View by PersonalFN
  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Should You Invest In Bharat-22 ETF? Know Here...
Aug 8, 2017

Bharat-22 is in the news of late. It's the latest offering in the series of Exchange Traded Funds (ETFs) launched by the Government to offload its stake in some listed companies. Besides having exposure to CPSEs (Central Public Sector Enterprises), Bharat-22 will also capture a few of the holdings of SUUTI (Specified Undertaking of Unit Trust of India). The Government has set a divestment target of Rs 72,500 crore for the fiscal year 2017-18, and as per the official figures, the Government has so far raised Rs 9,300 through 9 transactions.

Where will the ETF invest?

As the name suggests, the Bharat-22 is set to comprise of 22 companies. The tentative allocation of the ETF would be as follows:

Constituents of Bharat-22
Basic Materials
1 National Aluminium Co Ltd. 4.4
Total 4.4
Energy
2 Oil & Natural Gas Corp Ltd. 5.3
3 Indian Oil Corp Ltd. 4.4
4 Bharat Petroleum Corp Ltd. 4.4
5 Coal India Ltd. 3.3
Total 17.5
Finance
6 State Bank of India 8.6
7 Axis Bank Ltd. 7.7
8 Bank of Baroda 1.4
9 Rural Electrification Corp Ltd. 1.3
10 Power Finance Corp Ltd. 1
11 Indian Bank 0.2
Total 20.3
FMCG
12 ITC Ltd. 15.2
Total 15.2
Industrials
13 Larsen & Toubro Ltd. 17.1
14 Bharat Electronics Ltd. 3.3
15 Engineers India Ltd. 1.5
16 NBCC (India) Ltd. 0.6
Total 22.6
Utilities
17 Power Grid Corp of India Ltd. 7.9
18 NTPC Ltd. 6.7
19 Gail India Ltd. 3.7
20 NHPC Ltd. 1.2
21 NLC India Ltd. 0.3
22 SJVN Ltd. 0.2
  Total 20.0
Figures in %
(Source: Ministry of Finance)

Commenting on the sectoral exposure of Bharat-22, Finance Minister Mr Arun Jaitley said, "While selecting each of these sectors, we have also kept in mind sectoral reforms in each of the sectors which have had direct impact on the valuations of these shares." This means the table above may undergo some alterations at the time of creation of an index and thereafter.

In other words, the finance minister has tried to highlight that all companies it is divesting from are potential beneficiaries of the reforms introduced in the recent past. For example, Progressive liberalisation policies that permit FDI in most sectors under the automatic route will be beneficial to sectors such as industrials and finance. Similarly, reform measures such as the introduction of daily fuel pricing and direct benefit transfer of LPG subsidies will be beneficial to companies belonging to the energy and utility sector.

Who will manage the scheme?

ICICI Prudential Asset Management Company will manage Bharat-22 and Asia Index Pvt. Ltd. will offer index services to it.

Should you invest in Bharat-22?

Bharat-22 is one of the most diverse ETFs offered so far by the Government, as a part of its divestment programme. However, it may still not be the one for you.

Simply because top-5 stocks may account for over 50% of the overall portfolio and the top-5 sectors will form over 90% of the portfolio. Such aggressive allocation will expose you as an investor to sector specific risk. Even if you are a very aggressive investor, consider investing only a diminutive portion of your entire portfolio in Bharat-22 ETF.

The underlying portfolio of Bharat-22 might be well-positioned to take advantage of the opportunities created by the recent reforms, but that doesn't make it better than those of the well-managed diversified equity funds. In fact, experienced fund managers can take exposure to companies that are expected to be the beneficiaries of economic reforms, without exposing you to an elevated risk of concentration associated with Bharat-22.

To identify such winning mutual fund schemes we recommend you to subscribe to PersonalFN's latest unbiased mutual fund research report-Strategic Portfolio For 2025. If you're looking for "high investment gains at relatively moderate risk", the Strategic Portfolio For 2025 is perfect for you. In this report PersonalFN will provide you with a readymade portfolio of its top recommended equity mutual funds schemes for 2025 that have the ability to generate lucrative returns in the long run. We highly recommend you to opt for the report.

PersonalFN is a Mumbai based personal finance firm offering Financial Planning and Mutual Fund Research services.

Disclaimer:

The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

Equitymaster requests your view! Post a comment on "Should You Invest In Bharat-22 ETF? Know Here...". Click here!

1 Responses to "Should You Invest In Bharat-22 ETF? Know Here..."

S.prabhaker

Aug 26, 2017

18_294 RTC COLONY
SHADNAGAR
PIN 509216

Like 
  
Equitymaster requests your view! Post a comment on "Should You Invest In Bharat-22 ETF? Know Here...". Click here!

More Views on News

How to Ride Alongside India's Best Fund Managers (The 5 Minute Wrapup)

Jun 10, 2017

Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.

In Just 5 Minutes: Timely Ideas to Build Timeless Wealth (The 5 Minute Wrapup)

Sep 21, 2017

Safety-first investing is the real secret to building significant permanent wealth.

5 Brilliant Ways To Use Mutual Fund SIPs - Don't Ignore The Last One (Outside View)

Sep 21, 2017

An SIP may prove beneficial in more ways than one.

Enter My Inner Circle of Safe Stocks (The 5 Minute Wrapup)

Sep 19, 2017

The Inner Circle of Sensible Investing is where every safe investor wants to be.

Gold Imports Surge: Are People Hedging the Risk of Another Demonetisation? (Vivek Kaul's Diary)

Sep 19, 2017

Imports of the yellow metal have surged big time this year.

More Views on News

Most Popular

India's Big and Messy Real Estate Ponzi Scheme, Just Got Messier(Vivek Kaul's Diary)

Sep 11, 2017

The question is, whether real estate buyers are financial creditors or not.

The Recipe to Over 60% Returns in Less Than a Year(The 5 Minute Wrapup)

Sep 9, 2017

Short term crisis in some companies could unveil some great investing opportunities.

Feeling Left Out? Two Opportunities to Make Money in This Market(Daily Profit Hunter)

Sep 13, 2017

Nifty is above 10,000 once again. Have you missed the bus?

Introducing Smart Contrarian: The Blueprint for Big Profits from Small Investments

Sep 18, 2017

Welcome to a bold, new initiative designed for the truly contrarian investor.

How To Link Aadhaar With Your Mutual Fund Investments(Outside View)

Sep 11, 2017

The Government has extended the linking of the unique Aadhaar number to nearly all financial transactions.

More

Become A Smarter Investor In
Just 5 Minutes

Multibagger Stocks Guide 2017
Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE SENSEX


Sep 21, 2017 03:37 PM

MARKET STATS