The 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 ₹ 72,500 crore. During the current Financial Year 2017-18, the Government has realised approx ₹ 9,300 crore through nine disinvestment transactions so far.
Globally ETF Assets have grown significantly. Globally today there are 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) |
Jun-17 | 53,917 |
Mar-17 | 50,215 |
Mar-16 | 20,698 |
Mar-15 | 12,838 |
Mar-14 | 11,403 |
· ETF has been a preferred instrument for investment by PF's following flexibility given to them by govt. for their investments.
· Government raised ₹ 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 |
11 | Indian Bank | Finance | 0.2 |
| | Total - Finance (%) | 20.3 |
| | | |
12 | ITC Ltd | FMCG | 15.2 |
| | 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 |
18 | NTPC Ltd | Utilities | 6.7 |
19 | Gail India Ltd | Utilities | 3.7 |
20 | NHPC Ltd | Utilities | 1.2 |
21 | NLC India Ltd | Utilities | 0.3 |
22 | SJVN Ltd | Utilities | 0.2 |
| | 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 | • Finance |
2 | Taxation reforms: • Goods and Services Tax (GST) - Single Indirect tax structure aimed at eliminating cascading effect of indirect taxes. | • Basic Materials • Energy • Finance • FMCG • Industrials • Utilities |
3 | Infrastructure reforms: • Improvement in quality of infrastructure • Speeding up clearance of stalled infrastructure projects | • Basic Materials • Industrials |
4 | Liberalisation of Foreign Direct Investment (FDI) in India: Progressive liberalisation to permit FDI in most sectors under the automatic route. | • Finance • Industrials |
5 | Manufacturing in India: • Expanding Manufacturing facilities in India • International Skill Development Centre for domestic workers. | • Basic Materials • FMCG • Industrials |
6 | Oil & Gas Sector Reforms • Direct Benefit Transfer of LPG subsidies • Introduction of Daily Fuel pricing. | • Energy • Utilities |
7 | Energy Sector Reforms • Providing 24x7 quality, reliable and affordable power supply • Revival package for electricity distribution companies of India (DISCOMs). | • Energy • Finance • Utilities |
Exchange Traded Fund issuance: Bharat 22 ETF launched as a diversified disinvestment vehicle with annual index rebalancing. Announcement of the Bharat 22
Exchange Traded Fund (ETF) consisting of 22 CPSE, PSB and SUUTI strategic-holding stocks across six sectors, managed by ICICI Prudential AMC with Asia Index Private Limited as index provider; the Bharat 22 Index will be rebalanced annually. The ETF is presented as a disinvestment vehicle aligned with the 2017-18 budget policy, highlighting ETF attributes attractive to institutional investors and noting ETF AUM growth, pension fund investment flexibility, constituent weightings, and mapping of government reforms to sectoral beneficiaries.
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