Edelweiss Mutual Fund has launched the third tranche of its popular Bharat Bond brand. Should you invest?
03-Dec-2021 •Sneha Suri
Edelweiss Mutual Fund is back with the third tranche of its much famous Bharat Bond programme. The programme is aimed at bringing retail buyers in the corporate bond market which has largely been driven by institutional investors. Via the third tranche, the government is getting closer to its objective of creating a ladder of Bond ETFs with different maturities across calendar years.
The NFO period for Bharat Bond ETF - April 2032 is from December 3 to 9, 2021. It proposes to raise an initial amount of Rs 1,000 crore with an option to extend the amount by Rs 4,000 crore (popularly known as green shoe option). To cater to non-demat account holders, the product is also available in the form of fund of funds (FoFs).
The third tranche comes after the AMC's back-to-back successful launches in July 2020 (2025 and 2031 series) and December 2019 (2023 and 2030 series). Over the years, these funds have grown in popularity as reflected by the growing assets under their management.
The passive-debt segment's growth has only tended upwards since the launch of the Bharat Bond programme. Many AMCs have followed suit and launched target-maturity funds, while some AMCs are awaiting approval, as per the offer documents filed on SEBI's website. Having said that, Edelweiss Mutual Fund remains the leader in this domain.
This is the first time that the AMC isn't accompanying its long-term offering with a similar short-maturity one. During the virtual launch, Radhika Gupta, MD & CEO, Edelweiss Asset Management Limited said, "Unlike the previous two tranches, this time we are only launching one tranche because we want to bring in a long-term product and given the expectation of rising rates, it didn't feel great to come out with a product in the short-end of the curve."
The new series carries forward much of the previous tranches' features. At an expense ratio of 0.0005 per cent, it is the cheapest fund which is quite an advantage. Further, with a small ticket size of Rs 1,000 (maximum of Rs 2,00,000), the fund gives you access to high-quality bonds issued by PSUs, thereby one can assume the risk to be low. Below are the main features of the new series:
Should you invest?
For investors who are looking for predictable returns and have a horizon similar to the fund which is around 10 years, the new Bharat Bond ETF - April 2032 can be a good option to consider. Here you get a high-quality portfolio at extremely low cost and with the current indicative yield at 6.87 per cent, the post-tax returns should be better than conventional FDs and popular small saving schemes.
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