Bharat Bond ETF April 2032: How much you will get after investing Rs 1,00,000? Interest rate, maturity amount, tenure and more—All you need to know

Bharat Bond ETF April 2032 will remain open from December 3 to December 9, 2021. This is a 10-year product that will mature in April 2032. The bond offers a Gross yield of 6.87% and a tentative net of tax yield at around 6.4%. 

Bharat Bond ETF is an Exchange Traded Fund listed on the NSE, which invests your money in public sector bonds. The fund has a defined maturity date wherein you will receive your investment amount with returns. You can buy or sell units on exchange (NSE) anytime during the tenure of the fund.     

As per ICICI Direct, the government plans to raise around Rs 10,000 crore through this ETF. In its first tranche, it raised around Rs 12400 crore. In the second tranche in July 2020, it was subscribed more than three times, collecting about Rs 11,000 crore. 

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BHARAT Bond ETF – April 2032 will have a fixed maturity period having a diversified portfolio of Public Sector Company Bonds.  It will seek to track investment results of the Nifty BHARAT Bond Index – April 2032. It will invest in AAA-rated Public Sector bonds maturing on or before the maturity date of the respective fund It will endeavor to hold bonds till their maturity with an aim to provide stable and predictable returns. 

How much money do you get on maturity? 

As per Edelweiss Mutual Fund, Bharat Bond ETF April 2032 at 6.87% assumed rate of interest in 10 years or 11 indexation offers much better yield in comparison to traditional investment.  

A comparison on the Edelweiss Mutual Fund website shows, at an investment amount of Rs 1,00,000, one is assured of Rs 1,89,000 upon maturity post-tax value. However, traditional investment, which offers a 5.40% assumed rate of interest, would yield Rs 1,49,744 on maturity post taxation. The interest rate also changes invariably to 6.37% in Bharat Bond ETF April 2032 and 3.98% in the case of the latter, as per Edelweiss calculation.  

Source: Edelweiss Mutual Fund

It is to be noted that traditional Investment is taxed at 30% + 4% Cess and BHARAT Bond ETF – April 2032 at 20% + 4% Cess post indexation, it said.  

Should you Subscribe?   

Saying the Bharat Bond ETF offers a reliable and tax-efficient debt investment option for long-term investors, the ICICI Direct Research report has recommended to subscribe.   

"Bharat bond ETFs provide a higher degree of certainty of returns (if held to maturity) with a higher safety of capital as it invests in government-owned AAA-rated public sector bonds. With the current prevailing low-interest rate regime, which is likely to continue, some allocation could be considered by investors looking to lock in safe and predictable returns and not concerned about intermittent interest rate volatility," the report said. 

5 reasons to invest as per ICICI Direct 

Higher return: Gross yield at 6.87% and tentative net of tax yield at around 6.4%. 

Stability, Predictability, Safety: An ETF/MF-like structure with fixed maturity issued by AAA-rated PSE provides predictable and stable returns with low credit risk. 

Liquidity: Buy/sell on an exchange any time or through AMC in specific basket size. Edelweiss has also come out with a Bharat Bond FoF. It enables retail investors to enter and exit just like mutual funds   

Tax efficient: Tax efficient compared to traditional investment avenues. Taxed at only 20% post indexation, excluding surcharge   

Low cost: The expense ratio of the ETF is only 0.0005% 

How can you invest?  

One can invest in BHARAT Bond ETF – April 2032 with or without Demat account.  For more details refer to https://www.edelweissmf.com/nfo/BHARAT-Bond-ETF-April-2032-Presentation.pdf