Government announces new PSU ETF called Bharat-22 with diversified portfolio

Compared to energy heavy CPSE ETF, Bharat 22 is a well diversified portfolio with 6 sectors (basic materials, energy, finance, FMCG, industrials & utilities).

New Delhi: Finance Minister Arun Jaitley on Thursday announced creation of new ETF called Bharat 2022, comprising of 22 companies, or investments from central public sector undertakings, public sector banks and some other strategic holdings.

Compared to energy heavy CPSE ETF, Bharat 22 is a well diversified portfolio of companies from six sectors (basic materials, energy, finance, FMCG,  industrials & utilities) with a 20% cap on each sector and a 15% cap on each stock. 

It will feature four banking stocks -- SBI, Axis Bank, Bank of Baroda and Indian Bank -- other than CPSEs such as Nalco, ONGC, IOC, BPCL and Coal India.

Besides, there will be nine other PSUs as well as REC and PFC. SUUTI's holding in ITC has also been included. Ninety percent of the equities included are traded in futures. 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.

The first central public sector enterprises (CPSE) ETF, which was set up in 2014, comprised of 10 companies — Oil and Natural Gas Corp. (ONGC), Coal India, Indian Oil Corp. (IOC), GAIL (India), Oil India, Power Finance Corp. (PFC), Bharat Electronics, Rural Electrification Corp. (REC), Engineers India Ltd and Container Corporation of India.

Government had raised Rs 8500 crore by divesting through CPSE ETF in FY'16-17.

In the Budget Speech of 2017-18, Finance Minister 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 Rs 72,500 crore. During the current Financial Year 2017-18, the government has realised approx Rs 9,300 crore through nine disinvestment transactions so far.

Bharat 22 Index – Index constituents

National Aluminium Co Ltd (Basic Materials)- 4.4%

Total Basic Materials (4.4%)

Oil & Natural Gas Corp Ltd (energy)-5.3%

Indian Oil Corp Ltd (energy)- 4.4%

Bharat Petroleum Corp Ltd (energy)- 4.4%

Coal India Ltd (energy)- 3.3%

Total - Energy (17.5%)

State Bank of India (finance)- 8.6%

Axis Bank Ltd (finance)- 7.7%

Bank of Baroda( finance)- 1.4%

Rural Electrification Corp Ltd (finance)- 1.3%

Power Finance Corp Ltd (finance)- 1%

Indian Bank (finance)- 0.2%

Total - Finance (20.3%)

ITC Ltd (FMCG) - 15.2%

Total - FMCG (15.2%)

Larsen & Toubro Ltd (Industrials)- 17.1%

Bharat Electronics Ltd (Industrials) -3.3%

Engineers India Ltd (Industrials)- 1.5%

NBCC (India) Ltd (Industrials)- 0.6%

Total - Industrials (22.6%)

Power Grid Corp of India Ltd (utilities)- 7.9%

NTPC Ltd (utilities)- 6.7%

Gail India Ltd (utilities)- 3.7%

NHPC Ltd (utilities)- 1.2%

NLC India Ltd (utilities)- 0.3%

SJVN Ltd (utilities)- 0.2%

Total - Utilities (20%)