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 ₹ 72,500 crore. During the current Financial Year 2017-18, the Government has realised approx ₹ 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 ₹ 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
|
