Debt ETF to give opportunity to retail investors to invest in quality PSU bonds: Experts
Business Bureau :
THE Government’s decision to launch an umbrella debt exchange-traded fund will provide a better opportunity to retail investors for participation in quality public sector bonds at an affordable cost, experts said on Wednesday. They further said the move would also help in deepening and widening the participation in the Indian corporate bond market. The Union Cabinet has approved the launch of exchange traded fund (ETF) for bonds to create an additional source of funding for Central Public Sector Enterprises (CPSEs) and state-owned financial institutions.
The New Fund Offer (NFO) of this ETF is expected be to launched during December itself. Bharat Bond ETF would be the first corporate bond ETF in the country. “It’s a historic occasion for retail investors as also for the Indian corporate bond market, for retail investors as they would now be able to invest in an altogether new liquid avenue in quality public sector bonds, through the very low-cost ETF structure,” N S Venkatesh, Chief Executive at AMFI said on the Cabinet approval to bond ETFs. “And for the economy, as the country's first exchange-traded bonds belonging to quality public sector enterprises bundled in a liquid low-cost ETF structure, would help in deepening and widening the participation in the Indian corporate bond market,” he added.
ETF will be a basket of bonds issued by state firms or any Government organisation, and will be tradable on exchange. The unit size will be of Rs 1,000, which will allow small investors to invest. Edelweiss Asset Management Company, which will manage the Government’s debt ETF, said Bharat Bond ETF will be a diversified basket of public sector company bonds aimed at providing easy access for retail investors to invest in these bonds.