Union Cabinet approves launch of Bharat Bond ETF

The Union cabinet has approved the launch of the Bharat Bond Exchange Traded Fund (ETF). The Bharat Bond ETF will be a basket of bonds issued by state firms or government organisations and will be traded on the exchange. Reportedly, the ETF will be managed by Edelweiss Asset Management Limited. Initially, this basket of bonds will comprise only AAA-rated bonds. The ETF will have a fixed maturity date and will track the underlying index on a risk replication basis. The Bharat Bond ETF is likely to have two maturity series of 3 and 10 years. The minimum size of investment for the ETF is expected to be kept at 1,000 units, providing ease of access to investors. More than a dozen public sector undertakings’ bonds are expected to form part of the ETF, including the National Highways Authority of India (NHAI), the IRFC, Power Finance Corporation, NTPC, REC Limited and Power Grid Corporation of India Limited.