Arun Jaitley launches Bharat-22 ETF
Finance Minister Arun Jaitley on Friday launched Bharat-22 ETF (Exchange Traded Fund).
In the Budget Speech of 2017-18, 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," Finance Ministry said.
The index will comprise of 22 companies with 'finance' component at 20.3% weightage. Companies in this segment are: State Bank of India, Axis Bank, Bank of Baroda, Rural Electrification Corporation, Power Finance Corp and Indian Bank.
'Energy' has the second highest weightage of 17.5% with Nalco, ONGC, Indian Oil Corporation, BPCL and Coal India as its constituents.
This is followed by FMCG companies, namely, ITC, Bharat Electronics, Engineers India and NBCC forming 22.6% share.
Six 'utility' companies comprising Power Grid Corporation, NTPC Ltd, Gail India, NHPC, NLC India and SVJN at 20% share.
90% of the equities included are traded in futures and ICICI Prudential is the fund manager.
Globally ETF Assets have grown significantly. Globally today there are $4 trillion 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, the statement said.