Union Finance Minister Shri Arun Jaitley announced here today a new Exchange Traded Fund (ETF) by the name BHARAT 22. Bharat 22 consists of 22 stocks of CPSE’s, PSB’s & strategic holding of SUUTI (list as in Annexure). Compared to energy heavy CPSE ETF, Bharat 22 is a well Diversified portfolio with 6 sectors (Basic Materials, Energy, Finance, FMCG, Industrials & Utilities). The Bharat 22 Index will be rebalanced annually. ICICI Prudential AMC will be the ETF Manager and Asia Index Private Limited (JV BSE and S& P Global) will be the Index Provider.
In the Budget Speech of 2017-18, the Finance Minister Shri Arun Jaitley had promised to use ETF as a vehicle for further disinvestment of shares. The target for CPSE’s disinvestment in 2017-18 was set at Rs 72,500 crore. During the current Financial Year 2017-18, the Government has realised approx Rs 9,300 crore through nine disinvestment transactions so far.
Globally ETF Assets have grown significantly. Globally today there is 4 trillion dollar worth Assets Under Management (AUM). These are expected to touch $7 trillion by 2021. Large Investors (Sovereign/Pension Funds) prefer investing in ETFs due to the benefits of ETF being Low cost & Less risky; being Highly Liquid assets; Transparent Investment and that these can be traded at Real Time Market Price
Highlights of Growth of ETF market in India include:
- Flexibility in Investment guidelines of PF to invest in equity/ETF
- ETF Assets Under Management (AUM) has grown ~5 times in last 3 years
|Month||AUM (Rs. in crore)|
- ETF has been a preferred instrument for investment by PF’s following flexibility given to them by govt. for their investments.
- Government raised Rs.8500 crore by divesting through CPSE ETF in FY’16-17.
1: Bharat 22 Index – Index constituents
|Sr. No.||Company Name||Basic Industry||Weight (%)|
|1||National Aluminium Co Ltd||Basic Materials||4.4|
|Total – Basic Materials (%)||4.4|
|2||Oil & Natural Gas Corp Ltd||Energy||5.3|
|3||Indian Oil Corp Ltd||Energy||4.4|
|4||Bharat Petroleum Corp Ltd||Energy||4.4|
|5||Coal India Ltd||Energy||3.3|
|Total – Energy (%)||17.5|
|6||State Bank of India||Finance||8.6|
|7||Axis Bank Ltd||Finance||7.7|
|8||Bank of Baroda||Finance||1.4|
|9||Rural Electrification Corp Ltd||Finance||1.3|
|10||Power Finance Corp Ltd||Finance||1.0|
|Total – Finance (%)||20.3|
|Total – FMCG (%)||15.2|
|13||Larsen & Toubro Ltd||Industrials||17.1|
|14||Bharat Electronics Ltd||Industrials||3.3|
|15||Engineers India Ltd||Industrials||1.5|
|16||NBCC (India) Ltd||Industrials||0.6|
|Total – Industrials (%)||22.6|
|17||Power Grid Corp of India Ltd||Utilities||7.9|
|19||Gail India Ltd||Utilities||3.7|
|21||NLC India Ltd||Utilities||0.3|
|Total – Utilities (%)||20.0|
Annexure 2: Reform initiatives and benefiting component sectors
|Sr. No.||Government Reforms/ Initiatives||Sectors that may benefit|
|1||Financial sector reforms:
• Insolvency and Bankruptcy Code 2016
• Monetary Policy Committee
• Expansion of Banking sector
• Digital and Cashless Economy
• Listing of Insurance Companies
• Goods and Services Tax (GST) – Single Indirect tax structure aimed at eliminating cascading effect of indirect taxes.
|• Basic Materials
• Improvement in quality of infrastructure
• Speeding up clearance of stalled infrastructure projects
|• Basic Materials
|4||Liberalisation of Foreign Direct Investment (FDI) in India:
Progressive liberalisation to permit FDI in most sectors under the automatic route.
|5||Manufacturing in India:
• Expanding Manufacturing facilities in India
• International Skill Development Centre for domestic workers.
|• Basic Materials
|6||Oil & Gas Sector Reforms
• Direct Benefit Transfer of LPG subsidies
• Introduction of Daily Fuel pricing.
|7||Energy Sector Reforms
• Providing 24×7 quality, reliable and affordable power supply
• Revival package for electricity distribution companies of India (DISCOMs).