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Investing in the bond market has always been challenging for retail investors in India.  For this reason lot of people are not able to invest in bonds. The risks, low liquidity and complex procedures in corporate bonds keep many investors away from this sector. However, the Government of India has tried to change this situation by launching Bharat Bond ETF (Exchange Traded Fund) in 2019. This ETF offers small investors an opportunity to invest in high-quality bonds of public sector companies (PSU). In this blog, let us get detailed information about Bharat Bond ETF, understand its benefits, risks, tax benefits and how to invest. 

What is Bharat Bond ETF?

Bharat Bond ETF is an exchange-traded fund that invests in AAA-rated bonds of public sector companies and other government entities in India. 

This ETF is a Target Maturity ETF with a fixed maturity (e.g. 3, 5, 10 or 11 years). After the maturity, the fund is closed ,and investors get their money back with interest. 

This ETF tracks the Nifty Bharat Bond Index, which is compiled by the National Stock Exchange (NSE).

The Bharat Bond ETF was launched in December 2019, and since then, several tranches (e.g. April 2023, April 2030, April 2031, April 2033) have been launched. Edelweiss Mutual Fund manages this ETF, and it is approved by the Department of Investment and Public Asset Management (DIPAM), Government of India. The objective of this ETF is to strengthen the corporate bond market and provide a safe investment option to retail investors.

Features of Bharat Bond ETF:

Fixed Maturity:

Bharat Bond ETFs have a fixed maturity, such as April 2025, April 2030 or April 2033. This gives investors clarity about the duration of their investment.

AAA-Rated Bonds:

This ETF invests only in bonds of public sector companies with high credit ratings (AAA), such as REC, PFC, NABARD, Indian Oil Corporation, etc. This reduces credit risk.

Low Expense Ratio:

Bharat Bond ETF  have an extremely low expense ratio, just 0.0005% to 0.01%. This increases the potential for investors to earn higher returns.
 

Liquidity:

These ETFS are traded on stock exchanges (NSE/BSE), so investors can buy or sell units at any time.
 

Tax Efficiency:

Investments in Bharat Bond ETFS are taxable like debt funds. If you hold the investment for more than 3 years, you get a 20% tax and indexation benefit, which reduces the tax burden.

Benefits of investing in Bharat Bond ETF:
 

Safety:

Bharat Bond ETF invests only in AAA-rated bonds, which have almost no credit risk. Public sector companies and government agencies are backed by the government, so the chances of default are low.
 

Stable returns:

The fixed term of this ETF and the quality of the bonds make the returns stable and predictable. For example, the estimated yield for April 2033 is 7.5%.

Low costs:

It has low costs compared to other mutual funds, which increases your profits.

Flexibility:

You can sell units on the stock exchange or hold them until maturity. This gives you both liquidity and flexibility.

Easy for small investors:

The minimum investment is just Rs. 1,000, which makes it accessible to even small investors.

Risks in Bharat Bond ETFs:

Some of the risks are:

Interest Rate Risk:

If interest rates rise, bond prices may fall, which will impact the ETF's NAV. However, if you hold the investment until maturity, this risk is reduced.

Liquidity Risk:

Although ETFs are traded on a stock exchange, sometimes it can be difficult to sell units if there is not enough buying and selling in the market.

Credit Risk:

Although there are AAA-rated bonds, there is a possibility of a credit rating downgrade in rare cases.

Types of Bharat Bond ETF:
 

There are different tranches of Bharat Bond ETFs available, which have different maturities and yields. Some of the major types are as follows:

Bharat Bond ETF - April 2025:

This has a maturity of 5 years, and the estimated yield is 5.71%.

Bharat Bond ETF - April 2030:

 This is a 10-year term, and has so far given a return of 7.80%. Its NAV (April 16, 2025) is Rs. 1,489.9514, and AUM is Rs. 18,681 crore.
 

Bharat Bond ETF- April 2031: 

Its NAV (May 5, 2025) is Rs. 1,344.4883, and AUM is Rs. 12,877 crore.
 

Bharat Bond ETF- April 2033: 

This is the latest term, which has an estimated yield of 7.5%, and the term ends in April 2033.

How to invest in Bharat Bond ETF?
 

1. Investing in Bharat Bond ETF is easy. Follow the steps below:

Download the Finshak app from the following link. 

https://play.google.com/store/apps/details?id=com.finshakapp.app&pli=1

2. Create your profile

3.   go to the fund section 

4. select your fund , and start investing. 
 

Conclusion: 

Bharat Bond ETF is a low-risk, government-backed investment option that offers predictable returns and high safety. It is ideal for conservative investors seeking stable income through fixed-maturity bond exposure to public sector companies.