What is Bharat Bond ETF and How to Invest in Bharat Bond ETF

Bharat bond is an ETF(exchange-traded fund) organized by Edelweiss Mutual fund, and it is India’s first bond exchange-traded fund. Bharat bond ETF is a government of India initiative, and it is now available for retail investors. These bonds are available to the investors in the stock exchange. Investors who don’t have a Demat account can use FoF to buy this bond. You can get the form for the New Fund Offer at www.BharatBond.in and can submit it to the nearest Edelweiss’s branches.

Both ETF and FoF have high liquidity, but their settlement period changes. ETF  will be settled on a T+2 basis according to the current market price. Whereas FoF will be settled on a T+3 basis as it is based on the transaction day NAV.

Bharat Bond ETF is the best investment option. There are three benefits to this ETF. 

  • It is an AAA-rated bond and will invest only in public sector companies.
  • Expense ratio is very low (0.0005%)
  • As this ETF invests in AAA-rated funds risk will be very less

Nifty Bharat Bond Index – 2023

NIFTY Bharat Bond Index – 2030

Here are a few things to consider before investing in Bharat bond ETF:

Does Bharat bond ETF have taxes?

Taxes for Bharat bond ETF is the same as debt mutual funds. This ETF would be a tax-efficient long-term investment option for investors. This bond is of two types. After taxes excluded 6.16% for three years and 6.95% for ten years

Expected returns and tax implications for Bharat Bond ETF for 3 years

Bharat Bond or Debt Funds
Investment Amount2,00,000
Expected Returns6.69%
Expected Inflation4.00%
Indexation years3
Maturity Period3 Years
Value of Maturity2,42,885
Indexation Value2,24,973
Taxable Amount17,912
Tax on return – 20%3582
After Tax Value2,39,303
Net returns after Tax6.16%

Expected returns and tax implications for Bharat Bond ETF for 10 years

Bharat Bond or Debt Funds
Investment Amount2,00,000
Expected Returns7.58%
Expected Inflation4.00%
Indexation years10
Maturity Period10 Years
Value of Maturity4,15,284
Indexation Value2,96,049
Taxable Amount1,19,235
Tax on return – 20%23847
After Tax Value3,91,437
Net returns after Tax6.95%

Assurance of profits

The fixed-maturity period is the highlight of the Bharat bond ETF that will give good profits. Investors who will hold the ETF until the maturity period completes can expect 6.69% yearly, Whereas for ten years, holding period can get 7.58% yearly. Bharat bond ETF gives better returns when compared to other ETFs.

Types of Bharat bond ETF

You can invest in these bonds and earn profits according to the maturity period. These are of two types

Bharat Bond ETF – April 2023 – 3 years 

Bharat Bond ETF – April 2030 – 10 years

What is the minimum and maximum amount to invest in Bharat Bond ETF?

For retail investors, the minimum amount required to invest in Bharat bond ETF is Rs 1000, and the maximum amount will be two lakhs.

Is Bharat bond ETF have any Exit load

 If investors sell the bonds before 30 days from the purchase date, then there will be charged 0.10%, which is exit load charges. There will be no charges applicable if the investors sell the bonds after 30 days from the purchase date.

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