Edelweiss Mutual Fund

Investors go for Bharat Bond ETF

Wednesday 20th April, 2022

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YIELDS FOR SOME SCHEMES AT 7.32%, HIGHER THAN BANK FDs Investors go for Bharat Bond ETF Rich investors are staggering their funds into Bharat Bond ETF to earn as MUch as 7.32%. These bonds maturing In 2031 and 2032 Will beat bank deposit returns. Prashant Mahesh reports. 8 YIELDS for schemes maturing in 2031 & 2032 are as high as 7.3% and they are tax efficient, too Rich Investors See More Moolah in Bharat Bond ETF Prashant .Mahesh @timesgroup.com Mumbai: Affluent investors are staggering their investments into the Bharat Bond ETF where they can earn as much as 7.31%. AS interest rates rise, these bonds that mature in 2031 and 2032 give them higher returns than a bank deposit and come with a good quality portfolio of PSU bonds, liquidity and anegligiblc expense ratio. "Rich investors sitting on the sidelines looking for an opportunity to allocate money to debt can stagger money into Bharat Bond ETF with every rise in bond y elds," said Niranjan Awasthi, he. ad-product, Edelweiss Mutual Fund. Over the past month itself. the 10-year benchmark has moved up 37 basis points to 7.15%, while banks offer 5.5-5.6% on a 10-year fixed deposit. which makes the Bharat Bond ETF more attractive. One basis point is 0.01%. While a 10-year fixed deposit with HDFC Bank offers 5.6%, the Bharat Bond ETF maturing in April2032gives a yield of 7.31% ,giving investors extra returns of 1.71 percentage points. "After the sharp rise in bond yields, the attractiveness of long-tenure Bharat Bond ETF has increa sed. It scores over traditional de posits due to its low risk, higher return and tax efficiency," said Santosh Joseph, founder, of Germinate Investor Services. The portfolio of Bharat Bond ETF consists of high-quality AAA-rated bonds of public sector companies. with low credit risk. It is passively managed, and has an expense ratioof less than half paisa with the fund following a buy and hold strategy which means it invests in bonds that have a similar maturity as that of Bharat Bond ETF. Since these have a target maturity, thereisthecertainty of returns and hence financial planners beli eve investors could use them to meet some long-term goals like children's education or marriage. "Visibility of returns. high liquiAdity and tax efficiency make thls attractive for those in the high tax bracket," said Nirav Karkera, head of research, Fisdom. Karkera, however, said investors must buy with the objective of holding until maturity, as there could be fluctuations in bond prices were interest rates torise further. The ETF is tax-efficient for rich investors as being a debt fund, it enjoys indexation benefit which One Up On Banks Bharat Bond ETF Returns April 2023 5.20 | April 2025 6.20 | April 2030 7.25 | April 2031 7.20 Wm April 2032 7.31 means investors pay 20 tax om long-term capital gains.