Govt has been planning to disinvest in few Companies to bring down the fiscal deficit further from the existing 3% of GDP level. Though the Govt has already overachieved the target for FY 16-17, it is still quite aggressive in further reducing the same down.
In order to do the same, Govt. has announced the launch of its 2nd Exchange-traded fund (ETF) – Bharat 22.
It comprises of 22 stocks including those from Central Public Sector Enterprises (CPSEs), Public Sector Banks & its holdings under the Specified Undertaking of Unit Trust of India (SUUTI)
Bharat 22 ETF will have a diversified portfolio of companies from six sectors with a 20% cap on each sector & a 15% cap on each stock.
ETF – Exchange-traded funds (ETFs) are essentially index funds that are listed & traded on exchanges just as stocks trade on exchanges. It is a basket of stocks with assigned weights that reflects the composition of an index.
The stocks included in the ETF are
ICICI Prudential has been appointed as the fund manager of the new ETF.
ETF is a successful experiment globally with assets under management (AUM) of $4 trillion. Over four years, AUM is expected to touch $7 trillion as sovereign & pension funds have started preferring the ETF mode of investments.