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 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 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 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 |
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 |
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