FAQ #3 : What are the risks involved in Bharat bond ETF?

Investing in any fixed-income securities has four major risks- Price risk, Credit Risk, Reinvestment Risk and Liquidity Risk. We have mitigated these risks in the following manner:

Price Risk: The investment has target maturity. This means the initial yield is locked if the investment is continued till maturity. However, if you withdraw/redeem before maturity, Price risk will remain.

Credit Risk: Each bond issuer is a Government of India's Public Sector Enterprise with a credit rating of AAA. Default risk, therefore, is minimal.

Reinvestment Risk: Coupons/interest received by the fund shall be reinvested in the similar underlying assets as that of the Index/portfolio.

Liquidity Risk: We have appointed a market maker to provide liquidity on the exchanges. Hence, an investor can buy/sell their units on exchange anytime they wish.

Comments

Post a Comment

Popular posts from this blog

About Bharat Bond Debt ETF

Image
How does BHARAT Bond ETF work? Investment Strategy BHARAT Bond ETF will have fixed maturity period Follows Nifty BHARAT Bond ETF Index It will Invests in high quality 'AAA' rated bonds of Public Sector Companies Holds bond till their maturity and reinvest the coupons received Will invest 5% of its allocation towards G-Sec/TREPS for liquidity management purpose Benefits of Investing in BHARAT Bond ETF Stability and Predictability A bond like structure with fixed maturity provides predictable and stable returns at maturity. High Safety Investment in Public Sector bonds provide peace of mind Transparency Daily disclosure of portfolio constituents and live NAV periodically through the day No Lock-in Buy/Sell on exchange any time during trading hours or through AMC in creation size Lower Tax Enjoy the benefit of indexation, LTCG Tax at only 20% post indexation. * ( * Additional Surcharge applicable) Investment Options We have ...
Read more