The government of India opens the Bharat-22 Exchange Traded Fund managed by ICICI Prudential Life Insurance
- The fund is expected to fetch around Rs 8,000 crore for the government and it will be open for subscription until 17 November and a discount of 3% is being offered to all categories of investors.
- An ETF is a traded security that tracks an underlying asset like a group of companies or commodity.
- It is part of the government’s overall disinvestment programme.
- S&P BSE Bharat 22 Index comprises select companies from the CPSE (central public sector enterprises) universe, stakes held under the Specified Undertaking of the Unit Trust of India (SUUTI), and state-run banks.
- The S&P BSE Bharat 22 Index has a diversified representation in six BSE sectors—industrials, finance, utilities, energy, fast-moving consumer goods and basic materials.
- The index follows a free float-adjusted market cap weighting methodology, with a weighting of each individual index constituent capped at 1,5%, while weighting of each BSE sector is capped at 20%.
Background
- A disinvestment target of Rs 72,500 crore for the current fiscal has been set by Prime Minister Narendra Modi.
- Out of which Rs 46,500 crore is to be raised through disinvestment mode, while Rs 15,000 crore is the target in the case of strategic disinvestment that involves the surrender of government's majority control of the company.
- The government had earlier approved the alternative mechanism through the ETF route to divest its stake in CPSEs.
Features of ETF
- Many leading companies are part of this. The private sector having an exposure of 39 percent to the fund while the rest are public sector firms.
- The fund comprises leading blue-chips such as ITC (through SUUTI) with 15.2 percent weightage, State Bank of India with 8.6 percent weightage, and Axis Bank (through SUUTI) with 7.7 percent weightage. Bank of Baroda, Bharat Electronics, Bharat Petroleum Corp, Coal India, Engineers India, Gail India, Indian Bank, Indian Oil Corp, Larsen & Toubro, National Aluminium Co, NBCC (India), NHPC, NLC India, NTPC, Oil & Natural Gas Corp, Power Finance Corp, Power Grid Corp of India, Rural Electrification Corp and SJVN are the other constituents of the fund. The fund consists of stocks from six sectors such as capital goods, finance, oil & gas, power, FMCG and metal, metal products and mining.
- Bombay Stock Exchange launched S&P BSE Bharat 22 index on 10 August 2017.
- Combined market capitalisation of the fund is Rs 22.25 lakh crore
