Is Bharat-22 ETF a good bet? Here is a look at its pros and cons

The government is planning a follow-on offer of the Bharat-22 Exchange Traded Fund (ETF). ICICI Prudential Mutual Fund has filed draft papers. Here is a look at its pros and cons

Pros
  • This ETF's year-to-date track record is poorer than that of Sensex and Nifty ETF (it was launched towards end November 2017). But this time span is too short to make any judgement
  • Index's back-tested long-term returns are attractive  
  • Core sectors of the economy, like industrials, basic materials, energy and finance included. Can be used to capture the India growth story
  • Expense ratio is very low
  • If the government offers a discount, as it did last time, the offer will become more attractive

Cons

  • A more concentrated ETF that could be more volatile 
  • More of a thematic, PSU-focused investment

What should you do?

 
  • May consider this ETF for your satellite portfolio, with allocation of 3-5 per cent of equity portfolio
  • Not for new investors


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