Discount of 3% on offer for the ETF which consists primarily of bluechip stocks. The NFO opens on Wednesday.
Investors sold on the India story will get an opportunity to participate in the growth through bluechip stocks over the next four days as Bharat 22 ETF opens for subscription on Wednesday. Anchor investors will gain access to the offer a day earlier.
The new fund offer (NFO), which will be managed by ICICI Prudential AMC, was launched on Monday as part of the central government’s divestment programme. As the name suggests, the ETF will invest in 22 stocks of public and private sector majors including State Bank of India, National Aluminum Co Ltd (NALCO), Bank of Baroda (BoB), Axis Bank and Larsen & Toubro (L&T) among others. The stated aim of the scheme is to invest in stocks that benefit from government inititiatives like financial inclusion, digitisation, Make in India, Goods and Services Tax (GST) and infrastructure reforms.
“Given the resounding success of the earlier product, a new product was designed after the lessons learned from other CPSE (central public sector enterprises) ETF,” said Anuradha Thakur, joint secretary, department of investment and public asset management, Ministry of Finance. However, unlike CPSE, this ETF also comprises three companies – L&T, ITC, and Axis Bank – in which the central government holds a stake through the SUUTI route. “We have given a 3% discount. This is a good discount given that half of the companies are bluechips. If we get a good response we can go beyond the issue size of Rs 8,000 crore,” added Thakur.
The fund house has positioned the scheme as the smart choice for long-term investors. “We believe the ETF offers an attractive long term investment opportunity to partake in the India growth story by way of a diversified blend of companies spread across several sectors and are available at attractive valuation and a good subscription discount,” said Nimesh Shah, MD and CEO, ICICI Prudential AMC.
Similarly, Ashish Chauhan, MD and CEO, BSE, too sounded optimistic about the fund’s fortunes. “Bharat 22 is a better index to invest in. Government will be able to resolve many issues using such funds. India will see a framework where people can invest in funds which are well balanced and growth oriented,” he said.
Financial advisors have given a thumbs up to its long-term prospects, while asking investors to tread carefully. “At present, the stock markets are overvalued. Investors will have to stay invested in the scheme over the long-term to reap benefits. Also, remember the discount being offered is lower than what the CPSE ETF offered (5%),” said Pankaj Mathpal, CEO, Optima Money Managers.