How To Invest In Newly Launched Debt Exchange Traded Funds With Just Rs 1000?

Bharat Bond Exchange Traded Fund (ETF) is the first ever corporate bond ETF in India making a debut in the country around this time. Recently winning the approval of the Union Cabinet, this all new debt exchange trade fund consists of bonds issued by CPSEs (Central Public Sector Enterprises). This concept has been well received by the investors since it allows even small investors to get high interest rates on their savings. CPSE will invite a long term fund via borrowing.

More about ETF bonds

ETF will consist of a portfolio of bonds that will be issued by Central Public Sector undertakings (CPSUs), Central Public Sector Enterprises (CPSEs), and Central Public Financial Institutions (CPFIs). Other types of Government organization Bonds will also come under this category. To start with, we will find all the bonds with AAA rating which will indicate the highest level of security governing the bonds.

Different aspects of Bharat Bond ETF

These bonds are tradable on exchange.

The smallest unit size of Bharat Bond ETF is valued at Rs 1,000.

Transparent NAV is one of its top highlights.

Due to daily disclosure on website, the fund will feature a transparent portfolio

The bond comes with low cost (0.0005 percent).

What you must know about investing in ETF

Investing in ETF is not a tricky thing to do. Every ETF will have a fixed date of maturity. The ETF will keep tracking the underlying index on the basis of risk replication, which will be done by matching credit quality and average maturity of the given index.

Debt exchange traded funds will be invested in a wide portfolio of bonds issued by government organizations that carry a maturity date before the given ETF matures.

The two maturity series available now are 3 years and 10 years. Each series can be identified with a unique index of the same maturity series.

How can you benefit by investing in the newly launched debt exchange traded fund?

Since all the bonds are issued by CPSEs and other entities owned by the government, this investment avenue provides the safest option for investment.

As a retail investor, you can invest as low as Rs 1,000 and hence you can enjoy easy access to bond markets. If you are a retail investor not able to invest in bonds due to concerns about liquidity and inaccessibility, ETF can now provide you a profitable avenue to invest.

Since the demand for these bonds will increase in future, the issuers can borrow at a low cost which will mean their cost of borrowing will come down over a period of time.

Final word

The alluring characteristics of the all new debt exchange traded funds will deepen the bond market in India further and significantly increase the retail participation by reducing the borrowing costs. Hence this can be the best option available in front of you if you are looking forward to invest as low as Rs 1,000 and also get more and safe returns on your investments eventually.