ICICI Prudential Mutual Funds has filed a draft offer document with SEBI to launch Bharat 22 ETF.
Earlier in August, the government had appointed ICICI Prudential Mutual Fund to manage the new ETF to divest stake in 22 companies.
While the earlier government ETFs had a sectoral focus, this ETF will have a well-diversified portfolio with exposure to six sectors such as basic materials, energy, finance, FMCG, industrials & utilities. Bharat 22 consists of 22 stocks of Central Public Sector Enterprises (CPSEs), Public Sector Banks (PSBs) and strategic holdings of Specified Undertaking of the Unit Trust of India (SUUTI). The Bharat 22 Index will be rebalanced annually.
The Bharat 22 constitutes companies like National Aluminium, ONGC, Coal India, IOC, BPCL, SBI, Axis, Bank of Baroda, Rural Electrification Corporation, Power Finance Corporation, Indian Bank, ITC, Bharat Electronics, Engineers India NBCC, Power Grid, NTPC, Gail India, NHPC, NLC India and SJVN. The Government of India holds a majority stake in these companies.
The fund house proposes to charge a fund management fee of up to 0.0095% of daily NAV. Kayzad Eghlim will manage the fund.
While ICICI Prudential AMC will be the ETF manager, Asia Index Private Limited (JV BSE and S&P Global) will be the index provider.
Globally ETF assets have grown significantly with an AUM of $4 trillion as on June 2017. ETFs are likely to touch AUM of $7 trillion by 2021, say some experts. Large Investors such as pension funds prefer investing in ETFs due to the benefits of low cost, transparency and liquidity.
In India, the ETF category has grown almost five times in just three years. Its AUM grew from Rs.11,400 crore in March 2014 to Rs.54,000 crore in June 2017.
