 "Arun Jaitley")
The government today said it has set up a new exchange-traded fund (ETF), Bharat-22, comprising 22 scrips including ONGC, IOC, SBI and Axis Bank.
This will be the second ETF from the government after it raised over Rs 8,509 crore from three tranches of CPSE ETF.
Bharat-22 will have a diversified portfolio of six sectors, including energy, FMCG, finance, basic material and industrial and utilities, Finance Minister Arun Jaitley told reporters here.
The 22 scrips include central public sector enterprises (CPSEs), state-owned banks and government's strategic holding in Axis Bank, ITC and L&T held through SUUTI (Specified Undertaking of Unit Trust of India).
"While selecting each of these sectors, we have kept in mind sectoral reforms which have had direct impact on the valuation of these shares... We believe that this ETF will be a fairly successful one," Jaitley said.
ETF functions like a mutual fund scheme and is bought by investors as units.
The oil and gas and coal and mine PSUs whose scrips figure in the new ETF are ONGC, IOC, BPCL, Coal India and Nalco.
The other CPSEs which on the list are Bharat Electronics, Engineers India, NBCC, NTPC, NHPC, SJVNL, GAIL, PGCIL and NLC India.
Only three PSU banks — SBI, Indian Bank and Bank of Baroda — figure in the Bharat-22 index.
Also, the government holding in Axis Bank, ITC and Larsen and Toubro held through SUUTI is also part of the ETF basket.
A list of 22 companies effectively means that small tranches of government holding in CPSEs and PSBs will be included, he added.
Jaitley said the inclusion of three PSU banks in Bharat-22 is "consistent" with the government policy.
"Government's stake can go down to 52 per cent in PSU banks and whenever possible, we will look for a possible consolidation," he added.
The government had raised about Rs 8,500 crore through the three tranches of CPSE ETF last fiscal.
The first CPSE ETF consisted of scrips of 10 PSUs — ONGC, Coal India, IOC, GAIL (India), Oil India, PFC, Bharat Electronics, REC, Engineers India and Container Corporation of India.
India, Jaitley said, has tried the ETF experiment successfully and globally, ETF asset under management stands at USD 4 trillion.
Over 4 years, this AUM is expected to touch USD 7 trillion as sovereign and pension funds have started preferring the ETF mode, the finance minister said.
ETF investment is less risky and provides liquid assets which are traded real time and is a transparent mode of investment, Jaitley pointed out.
Asked when the first tranche of Bharat-22 will hit the market, DIPAM Secretary Neeraj Gupta said there is no cap on funds that can be raised though ETF.
"It will be different tranches as per requirement of the government," he said.
The secretary in Department of Investment and Public Asset Management (DIPAM) said further that while formulating the ETF basket, returns for the last 10 years have been validated.
"Ninety per cent of the equities included are also traded in futures," Gupta said, adding that ICICI Prudential is the fund manager for Bharat-22.
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