Bharat Bond ETF invests in Public-Sector companies' Bonds
This can be your VERY SAFE alternate to FDs, PPF etc.🤯
The LAST date to subscribe in latest issue today😬
Here's everything you need to know about Bharat Bond ETF👇
This can be your VERY SAFE alternate to FDs, PPF etc.🤯
The LAST date to subscribe in latest issue today😬
Here's everything you need to know about Bharat Bond ETF👇
1/ What is Bharat Bond ETF?
- A fund which invests in BONDS
- of Govt owned entities having AAA-rating
- having a target maturity
The latest issue will invest in govt companies' bonds maturing in April, 2033
Does this mean I can't get the money invested till Apr, 2033? Read👇
- A fund which invests in BONDS
- of Govt owned entities having AAA-rating
- having a target maturity
The latest issue will invest in govt companies' bonds maturing in April, 2033
Does this mean I can't get the money invested till Apr, 2033? Read👇
2/ Liquidity and lock-in conditions
No. An ETF is freely tradable on exchanges.
This means that even though the bonds will pay you back money in April, 2033
Just like you sell stocks,
You can sell these bonds to an investor on the exchanges who wants it from you
No. An ETF is freely tradable on exchanges.
This means that even though the bonds will pay you back money in April, 2033
Just like you sell stocks,
You can sell these bonds to an investor on the exchanges who wants it from you
3/ What about Returns?
The present day return (YTM) on these public sector bonds is ~7.67%
Your expected returns can be around the same
A comparison between Bharat Bond ETF and FD (at 6.1% interest rate) has been made by Edelweiss AMC👇
The present day return (YTM) on these public sector bonds is ~7.67%
Your expected returns can be around the same
A comparison between Bharat Bond ETF and FD (at 6.1% interest rate) has been made by Edelweiss AMC👇
4/ Are the returns guaranteed?
Just like the debt funds,
the value of a debt fund moves up and down with the change in interest rates
So, if interest rates
--> Go up, value of bonds goes down
--> Go down, value of bonds goes up
In PPF, FD etc. this risk isn't there
Just like the debt funds,
the value of a debt fund moves up and down with the change in interest rates
So, if interest rates
--> Go up, value of bonds goes down
--> Go down, value of bonds goes up
In PPF, FD etc. this risk isn't there
5/ What about costs?
The Bharat Bond ETF comes with lowest possible expense ratio😄
of just 0.0005% 🤯
This is where it beats Debt Mutual Funds having 0.2-0.5% expense ratios
You are getting almost all the interest that these companies are declaring
The Bharat Bond ETF comes with lowest possible expense ratio😄
of just 0.0005% 🤯
This is where it beats Debt Mutual Funds having 0.2-0.5% expense ratios
You are getting almost all the interest that these companies are declaring
6/ Will I have regular income?
No. Unlike FDs, regular coupon payment bonds,
Bharat Bond ETF pays at the end of maturity
But this is rather beneficial from two perspectives:
- Taxation (taxed at just 20% after Indexation)🤩
- Compounding (because you won't withdraw interest)
No. Unlike FDs, regular coupon payment bonds,
Bharat Bond ETF pays at the end of maturity
But this is rather beneficial from two perspectives:
- Taxation (taxed at just 20% after Indexation)🤩
- Compounding (because you won't withdraw interest)
7/ What about risks?
A. Interest Rate Cycle
- As explained in 4/, if interest rates go up, your return might suffer but the chance of principal value of bonds going down is less
B. Default by entities
- The chance of public sector entities default is damn low
A. Interest Rate Cycle
- As explained in 4/, if interest rates go up, your return might suffer but the chance of principal value of bonds going down is less
B. Default by entities
- The chance of public sector entities default is damn low
8/ Who is managing my money?
Bharat Bond ETF is a govt-led initiative only
The bid to run it was won by Edelweiss AMC
Govt launched this initiative because to issue bonds or seek for loans from banks came with a heavy cost
This was a win-win for both public and govt entities
Bharat Bond ETF is a govt-led initiative only
The bid to run it was won by Edelweiss AMC
Govt launched this initiative because to issue bonds or seek for loans from banks came with a heavy cost
This was a win-win for both public and govt entities
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Disclaimer: This is not an investment advice. Please do your own diligence or consult a SEBI Registered Investment Adviser before taking any decision
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