BHARAT Bond ETF (Exchange-Traded Fund) is a government-backed bond ETF that was launched by the Government of India in 2019. It is designed to track the performance of a basket of public sector bonds with high credit ratings, offering investors an opportunity to invest in bonds issued by government-owned companies. The fund aims to provide regular income and capital appreciation, while keeping the risk relatively low, as it primarily invests in bonds from government-owned entities.
key details about BHARAT Bond ETF:
(1) Issuer: The ETF is managed by Edelweiss Asset Management and is backed by the government. It offers a low-risk investment option for retail investors.
(2) Investment Objective: The primary objective is to generate returns by investing in a diversified portfolio of bonds issued by public sector undertakings (PSUs), government-owned enterprises, and other government-backed entities.
(3) Liquidity: Being an ETF, it is traded on the stock exchanges like a regular stock. It provides liquidity to investors, who can buy and sell units during market hours.
(4) Taxation: The ETF enjoys tax benefits similar to those of other debt mutual funds, such as capital gains taxation. If held for more than three years, long-term capital gains are taxed at 20% with indexation benefits.
(5) Types of Funds: There are different series of BHARAT Bond ETF with varying maturity periods:
- BHARAT Bond ETF April 2023: Matures in April 2023.
- BHARAT Bond ETF April 2030: Matures in April 2030.
(6) Expense Ratio: One of the attractive features of BHARAT Bond ETFs is its relatively low expense ratio, which makes it more cost-effective compared to actively managed mutual funds.
(7) Risk Profile: The ETF carries low credit risk, as the underlying assets are issued by government-backed institutions. However, investors must still consider market risks, interest rate risks, and inflation risks that could affect bond prices.
(8) Returns: It is expected to provide returns in line with the yields of government bonds, which can be more stable compared to equity markets but with lower potential returns.
BHARAT Bond ETF Overview
The BHARAT Bond ETF is a government-backed Exchange-Traded Fund (ETF) launched by the Government of India with the goal of providing retail investors with an easy and cost-effective way to invest in high-quality public sector bonds. It offers an opportunity to invest in bonds issued by Indian public sector companies, which are often considered to have a relatively low risk due to their government backing.
Here is a detailed overview of the BHARAT Bond ETF:
1. Fund Structure and Launch
- Launched: December 2019
- Issuer/Manager: Edelweiss Asset Management
- Objective: The BHARAT Bond ETF aims to track the performance of bonds issued by Public Sector Undertakings (PSUs) with high credit ratings, and to provide investors with a fixed-income instrument that has relatively low risk compared to other investment avenues.
2. Investment Objective
The fund’s primary objective is to generate returns through:
- Regular income from the coupon payments of bonds.
- Capital appreciation from bond price movements, though this is secondary to the income from bonds.
3. Underlying Assets
- The ETF invests in bonds issued by public sector enterprises (PSUs), government-backed organizations, and public financial institutions with high credit ratings (typically AA+ and above).
The ETF includes bonds from companies such as:
- Power Grid Corporation
- Rural Electrification Corporation (REC)
- NTPC Limited
- India Infrastructure Finance Company Limited (IIFCL)
4. Key Features of BHARAT Bond ETF
- Type: ETF (Exchange-Traded Fund), listed on stock exchanges.
- Liquidity: It can be traded on the stock exchange like a regular stock, providing liquidity to investors.
Maturity: The ETF comes in different series with varying maturity periods:
- BHARAT Bond ETF April 2023
- BHARAT Bond ETF April 2030
- April 2031
- April 2032
Taxation: The tax treatment is similar to debt mutual funds:
- Short-Term Capital Gains (STCG): Taxed at 15% if sold before 3 years.
- Long-Term Capital Gains (LTCG): Taxed at 20% with indexation if held for more than 3 years.
- Interest income is taxed as per the individual’s tax slab.
Expense Ratio: The expense ratio is generally low compared to actively managed funds, making it a cost-effective investment vehicle.
5. Expected Returns and Yield
- Yield to Maturity (YTM) at launch was around 6.75% – 7.5%, depending on the series and maturity period.
- Annualized Returns: Historical annualized returns for different series of the ETF have been in the range of 6% – 7% (depending on the series).
6. Risk Profile
The BHARAT Bond ETF carries a low-to-moderate risk, primarily because:
- Credit Risk is low since the bonds are issued by public sector enterprises with strong government backing.
- Interest Rate Risk: As with all bond investments, rising interest rates can negatively impact the price of bonds, and thus the value of the ETF.
- Inflation Risk: Inflation can erode the purchasing power of the returns over time.
7. Tax Benefits
Since the BHARAT Bond ETF is structured like a debt mutual fund, it offers tax advantages:
- Investors benefit from indexation benefits when held for more than three years, which reduces the tax liability on long-term capital gains.
8. Trading and Liquidity
- As an ETF, BHARAT Bond ETF is listed on major stock exchanges like the NSE and BSE.
- Investors can buy and sell units of the ETF during market hours just like stocks, providing flexibility and liquidity.
9. Historical Performance
- The BHARAT Bond ETF April 2023 series, for example, had a YTM of around 6.75% and returned approximately 6.4% – 6.5% annually over a one-to-three-year period.
- The BHARAT Bond ETF April 2030 series, with a slightly longer maturity, showed returns around 6.9% – 7.0% annually.
10. Benefits of Investing in BHARAT Bond ETF
- Low Risk: Investment in government-backed bonds provides a relatively stable and low-risk income stream.
- Liquidity: As a tradable ETF, it offers flexibility for investors to buy or sell units anytime the stock market is open.
- Diversification: Exposure to a diversified portfolio of public sector bonds, which reduces the risk compared to holding individual bonds.
- Transparency: The ETF’s holdings are publicly disclosed, allowing investors to easily track the underlying assets.
Conclusion
The BHARAT Bond ETF is an excellent choice for conservative investors looking for a low-risk investment with stable returns. It offers easy access to high-quality public sector bonds, and its ETF structure provides liquidity and transparency. Whether you’re looking to invest for the short-term or long-term, the BHARAT Bond ETF can be an ideal choice for those seeking income and capital preservation in a safe and accessible manner.
Bharat Bond ETF Returns
The returns of the BHARAT Bond ETF can vary depending on the series (due to differing maturity dates) and market conditions. Below is a generalized overview of the returns for different series of the BHARAT Bond ETF based on their performance at launch, as well as projected returns based on yield to maturity (YTM).
Table: Historical & Projected Returns of BHARAT Bond ETF
| Series | Launch Date | Maturity | Initial YTM (Approx.) | 1-Year Return (Approx.) | 3-Year Return (Approx.) | Annualized Return (Approx.) |
| BHARAT Bond ETF April 2023 | December 2019 | April 2023 | 6.75% | 6.4% | 6.3% | 6.4% |
| BHARAT Bond ETF April 2030 | December 2019 | April 2030 | 7.5% | 6.9% | 7.0% | 7.0% |
| BHARAT Bond ETF April 2031 | December 2020 | April 2031 | 6.85% | 6.5% | 6.7% | 6.6% |
| BHARAT Bond ETF April 2032 | December 2020 | April 2032 | 7.0% | 6.8% | 6.9% | 6.9% |
Explanation:
- YTM (Yield to Maturity): This represents the approximate return an investor can expect if the bonds in the ETF are held until maturity. The YTM at launch typically ranged between 6.75% to 7.5% for different series.
- 1-Year Return: The return calculated based on the price movement of the ETF and coupon payments over a one-year period.
- 3-Year Return: The return over the past three years (where applicable).
- Annualized Return: This is the compound annual growth rate (CAGR) over the investment period, reflecting the average yearly return.
Bharat Bond ETF Share Price
The BHARAT Bond ETF is a government-backed exchange-traded fund that invests in bonds issued by public sector companies in India. Each series of the ETF has a specific maturity date, and their share prices fluctuate based on market conditions, interest rates, and the time remaining until maturity.
As of January 15, 2025, here are the latest available share prices for some of the BHARAT Bond ETF series:
| ETF Series | Ticker Symbol | Latest Share Price (₹) | Date |
| BHARAT Bond ETF – April 2030 | EBBETF0430 | 1,439.50 | January 9, 2025 |
| BHARAT Bond ETF – April 2032 | BBETF0432 | 1,205.99 | November 22, 2024 |
For the most current share prices, it’s advisable to check real-time data on the National Stock Exchange (NSE) or Bombay Stock Exchange (BSE) websites, or through financial news platforms and brokerage services.
BHARAT Bond ETF Top Holdings
The BHARAT Bond ETF primarily holds bonds issued by high-rated public sector companies (PSUs). These bonds are typically rated AAA or equivalent, ensuring high credit quality and relatively low default risk.
Here are the typical top holdings in different BHARAT Bond ETF series:
BHARAT Bond ETF April 2030/2031 Series
| Issuer | Weight (%) | Credit Rating |
| Power Grid Corporation of India | ~15-18% | AAA |
| NTPC Limited | ~12-15% | AAA |
| National Highways Authority | ~10-12% | AAA |
| Indian Railway Finance Corp | ~8-10% | AAA |
| REC Limited | ~8-10% | AAA |
| Nuclear Power Corporation | ~6-8% | AAA |
BHARAT Bond ETF April 2032 Series
| Issuer | Weight (%) | Credit Rating |
| Indian Oil Corporation (IOC) | ~15% | AAA |
| Power Finance Corporation (PFC) | ~12% | AAA |
| Housing & Urban Development Corp | ~10% | AAA |
| NHPC Limited | ~8% | AAA |
| National Bank for Agriculture | ~7% | AAA |
The BHARAT Bond ETF primarily holds bonds issued by high-rated public sector companies (PSUs). These bonds are typically rated AAA or equivalent, ensuring high credit quality and relatively low default risk.
Here are the typical top holdings in different BHARAT Bond ETF series:
1. BHARAT Bond ETF April 2030/2031 Series
| Issuer | Weight (%) | Credit Rating |
|---|---|---|
| Power Grid Corporation of India | ~15-18% | AAA |
| NTPC Limited | ~12-15% | AAA |
| National Highways Authority | ~10-12% | AAA |
| Indian Railway Finance Corp | ~8-10% | AAA |
| REC Limited | ~8-10% | AAA |
| Nuclear Power Corporation | ~6-8% | AAA |
2. BHARAT Bond ETF April 2032 Series
| Issuer | Weight (%) | Credit Rating |
|---|---|---|
| Indian Oil Corporation (IOC) | ~15% | AAA |
| Power Finance Corporation (PFC) | ~12% | AAA |
| Housing & Urban Development Corp | ~10% | AAA |
| NHPC Limited | ~8% | AAA |
| National Bank for Agriculture | ~7% | AAA |
Investment Focus
- Bonds have a fixed coupon payment schedule, contributing to stable income.
- Investments are diversified across various industries like power, infrastructure, and finance.
Transparency
Edelweiss Asset Management regularly publishes the portfolio details on its website. For the latest holdings, visit the official Edelweiss or stock exchange platforms.
Key Observations
- The ETF focuses on AAA-rated securities to ensure low credit risk.
- The holdings reflect a diversified PSU bond portfolio to reduce risk exposure.
This composition helps maintain a balance between safety, stability, and moderate returns for investors.
Strengths of BHARAT Bond ETF
(1) Low Credit Risk:
- The underlying bonds are issued by high-rated (AAA) public sector enterprises (PSUs), backed by the Government of India, reducing the risk of default.
(2) Stable Returns:
- The ETF provides predictable and steady returns due to fixed coupon payments from bonds.
(3) Tax Efficiency:
- Indexation benefits on long-term capital gains (holding period over 3 years) reduce the tax liability, making it more attractive for long-term investors.
(4) Cost-Effective:
- The low expense ratio of BHARAT Bond ETFs makes them cheaper than actively managed debt funds.
(5) Liquidity:
- Being exchange-traded, investors can buy or sell units during market hours on stock exchanges (NSE and BSE).
(6) Transparency:
- The ETF provides full disclosure of its holdings, offering transparency in investment management.
(7) Diversification:
- Exposure to a broad range of public sector bonds across industries helps diversify risk.
(8) Defined Maturity Structure:
- The bonds have a clear maturity date (e.g., April 2023, April 2030), which allows investors to align their investment horizons.
Risks of BHARAT Bond ETF
(1) Interest Rate Risk:
- Bond prices are inversely related to interest rates. If market interest rates rise, the value of bonds held in the ETF could decline, leading to a potential fall in NAV (Net Asset Value).
(2) Liquidity Risk:
- Although traded on stock exchanges, there might be periods of low trading volumes, leading to difficulty in executing large trades without impacting the price.
(3) Market Risk:
- Market volatility can impact the trading price of the ETF, causing temporary deviations from the underlying bond values.
(4) Reinvestment Risk:
- Coupon payments may be reinvested at lower interest rates if prevailing rates drop.
(5) Inflation Risk:
- Over long periods, inflation can erode the purchasing power of returns from fixed-income instruments.
(6) Credit Risk (Minimal):
- Though the risk is low, any downgrade in the credit rating of PSU bonds could affect investor confidence and bond values.
(7) Tracking Error:
- Small deviations in actual performance compared to the index it tracks can occur due to operational factors such as expenses or reinvestment of coupons.
Strengths of BHARAT Bond ETF
- Low Credit Risk:
- The underlying bonds are issued by high-rated (AAA) public sector enterprises (PSUs), backed by the Government of India, reducing the risk of default.
- Stable Returns:
- The ETF provides predictable and steady returns due to fixed coupon payments from bonds.
- Tax Efficiency:
- Indexation benefits on long-term capital gains (holding period over 3 years) reduce the tax liability, making it more attractive for long-term investors.
- Cost-Effective:
- The low expense ratio of BHARAT Bond ETFs makes them cheaper than actively managed debt funds.
- Liquidity:
- Being exchange-traded, investors can buy or sell units during market hours on stock exchanges (NSE and BSE).
- Transparency:
- The ETF provides full disclosure of its holdings, offering transparency in investment management.
- Diversification:
- Exposure to a broad range of public sector bonds across industries helps diversify risk.
- Defined Maturity Structure:
- The bonds have a clear maturity date (e.g., April 2023, April 2030), which allows investors to align their investment horizons.
Risks of BHARAT Bond ETF
- Interest Rate Risk:
- Bond prices are inversely related to interest rates. If market interest rates rise, the value of bonds held in the ETF could decline, leading to a potential fall in NAV (Net Asset Value).
- Liquidity Risk:
- Although traded on stock exchanges, there might be periods of low trading volumes, leading to difficulty in executing large trades without impacting the price.
- Market Risk:
- Market volatility can impact the trading price of the ETF, causing temporary deviations from the underlying bond values.
- Reinvestment Risk:
- Coupon payments may be reinvested at lower interest rates if prevailing rates drop.
- Inflation Risk:
- Over long periods, inflation can erode the purchasing power of returns from fixed-income instruments.
- Credit Risk (Minimal):
- Though the risk is low, any downgrade in the credit rating of PSU bonds could affect investor confidence and bond values.
- Tracking Error:
- Small deviations in actual performance compared to the index it tracks can occur due to operational factors such as expenses or reinvestment of coupons.
Suitability
- Best for conservative investors seeking low-risk, stable returns with government-backed securities.
- Not ideal for aggressive investors seeking high returns or growth from equity-oriented investments.
Is HDFC Gold ETF a Good Investment? Performance and Insights
Axis Nifty 50 ETF: Everything You Need to Know Before Investing
DSP Gold ETF: Everything You Need To Know
Disclaimer: The content on this website is intended for informational purposes only and should not be interpreted as financial or investment advice. Engaging in stock market activities involves inherent risks, and outcomes can be unpredictable. While we strive to provide accurate and up-to-date information, we do not make any guarantees regarding the completeness or reliability of the content. Any investment decisions you make should be based on your own research and consultation with a qualified financial professional. We are not responsible for any financial gains or losses resulting from actions taken based on the information provided here. Always invest wisely and at your own risk.
