Discover and read the best of Twitter Threads about #BHARATBond
Most recents (9)
Today is the last day to subscribe for the new series of Bharat Bond - April 2032. Here's why I have invested more than ₹10 Crores in #BharatBond🧵
- More than 7.5% Yield - which no established bank in India offers for FD.
- FD Interest is taxable just like your salary income. Returns from Bharat Bond are subject to FAR less taxes. (2/n)
- FD Interest is taxable just like your salary income. Returns from Bharat Bond are subject to FAR less taxes. (2/n)
Reason:
- You receive Interest on your FD every quarter, which adds to your income for that FY
- Bharat Bond interest gets added to the Net Asset Value, and released only at the end of the series. Hence this is Capital Appreciation. (3/n)
- You receive Interest on your FD every quarter, which adds to your income for that FY
- Bharat Bond interest gets added to the Net Asset Value, and released only at the end of the series. Hence this is Capital Appreciation. (3/n)
Bharat Bond ETF invests in Public-Sector companies' Bonds
This can be your VERY SAFE alternate to FDs, PPF etc.🤯
The LAST date to subscribe in latest issue today😬
Here's everything you need to know about Bharat Bond ETF👇
This can be your VERY SAFE alternate to FDs, PPF etc.🤯
The LAST date to subscribe in latest issue today😬
Here's everything you need to know about Bharat Bond ETF👇
1/ What is Bharat Bond ETF?
- A fund which invests in BONDS
- of Govt owned entities having AAA-rating
- having a target maturity
The latest issue will invest in govt companies' bonds maturing in April, 2033
Does this mean I can't get the money invested till Apr, 2033? Read👇
- A fund which invests in BONDS
- of Govt owned entities having AAA-rating
- having a target maturity
The latest issue will invest in govt companies' bonds maturing in April, 2033
Does this mean I can't get the money invested till Apr, 2033? Read👇
2/ Liquidity and lock-in conditions
No. An ETF is freely tradable on exchanges.
This means that even though the bonds will pay you back money in April, 2033
Just like you sell stocks,
You can sell these bonds to an investor on the exchanges who wants it from you
No. An ETF is freely tradable on exchanges.
This means that even though the bonds will pay you back money in April, 2033
Just like you sell stocks,
You can sell these bonds to an investor on the exchanges who wants it from you
Pitfall of analyzing any Scheme on Point to Point returns basis is that it only tells you the opportunity which was available at the time of investment.
It does not tell you of future potential of the same scheme. One needs to see current data to understand future potential.
It does not tell you of future potential of the same scheme. One needs to see current data to understand future potential.
Please see current macro factors whether they are showing +ve or -ve triggers for debt to analyze future potential
Liquidity up(+),
Credit offtake down(+),
Current Account Surplus(+),
Fiscal deficit up(-),
Govt ratings down(-),
Crude down(+),
Recession up(+)
Compression(+)
Liquidity up(+),
Credit offtake down(+),
Current Account Surplus(+),
Fiscal deficit up(-),
Govt ratings down(-),
Crude down(+),
Recession up(+)
Compression(+)
Then compare yields on your chosen investment vehicles, past spreads and current compression possibility and Credit Quality & liquidity of underlying securities.
#BharatBond scores high on all above parameters.
#BharatBond scores high on all above parameters.
Why we love the idea of #BharatBond
1.Fixed Maturity – Hence are like Target Date Funds. It fills the gap of long dated Target Date Funds – Helps to plan a regular annual income stream
1.Fixed Maturity – Hence are like Target Date Funds. It fills the gap of long dated Target Date Funds – Helps to plan a regular annual income stream
2.Over a period we are likely to have the gaps in dates filled. May be could even have one maturing every 6 months. Smart investors can use it to construct their retirement plans!
3.Largely Interest rate immunized portfolios – When requirement date and maturity date are matched, the investor need not worry about MTM swings. You know what you are likely to get at maturity (intermediate cash flows may make more or less depending on their reinvestment rates)
Is this a right time to invest in #BharatBond ETF?
A frequent question in minds of many investors. When it comes to investing in debt, yields matter. It is always ideal to lock investments at higher yields.
Moot question is, at what level can we say it is high.
1/n
A frequent question in minds of many investors. When it comes to investing in debt, yields matter. It is always ideal to lock investments at higher yields.
Moot question is, at what level can we say it is high.
1/n
There are some ways to guage whether interest rates at which you are investing are good enough levels.
Let's see them one by one in context of current Nifty #BharatBond index yields.
Currently the index yield in 10yr is ~7.75% and in 3 yr ~6.83%
1/n
Let's see them one by one in context of current Nifty #BharatBond index yields.
Currently the index yield in 10yr is ~7.75% and in 3 yr ~6.83%
1/n
When we compare these yields with RBI policy rate which is at 5.15%, then 10 year yield (7.75%) is 2.6% above repo rate and 3 year yield (6.83%) is 1.68% above repo rate.
These levels are well above last 5 year average spreads.
These levels are well above last 5 year average spreads.
Understanding the risks in #BHARATBond ETF and how do you mitigate them.
Any market link investment product has some risks attached to it. Some carry higher risk while some carry relatively lower risk. BB ETF falls in the latter category where risks are relatively lower.
1/n
Any market link investment product has some risks attached to it. Some carry higher risk while some carry relatively lower risk. BB ETF falls in the latter category where risks are relatively lower.
1/n
1. Price risk - this risk comes from fluctuating bond prices due to changes in interest rates. Rising interest rates leads to fall in bond prices and falling interest rates leads to rise in bond prices. BB ETF NAV may fluctuate due to such rising or falling interest rate.
1/n
1/n
However, this fluctuation in NAV shall not affect you if you are holding BB ETF till its maturity. It will affect only if you exit your investments before maturity leading to higher or lower returns.
Also, such fluctuation reduces significantly as ETF approaches its maturity.
Also, such fluctuation reduces significantly as ETF approaches its maturity.
Understanding #BHARATBond ETF's liquidity. @EdelweissAMC
@iRadhikaGupta @itsdeepakjain
BB ETF will have 3 levels of liquidity:
1. Visible secondary market liquidity - This is 1st level liquidity that comes naturally through buy/sell orders from existing investors.
@iRadhikaGupta @itsdeepakjain
BB ETF will have 3 levels of liquidity:
1. Visible secondary market liquidity - This is 1st level liquidity that comes naturally through buy/sell orders from existing investors.
Large size of BB ETF that will be spread across large number of investors will bring natural liquidity in BB ETF as they trade on exchange.
2. Hidden secondary market liquidity - If 1st level liquidity is not enough and spreads widen, then market makers will step-in.
2. Hidden secondary market liquidity - If 1st level liquidity is not enough and spreads widen, then market makers will step-in.
AMC will be appointing multiple market makers who have expertise in bond markets to ensure bid ask spreads are lower. These MM will hold ETF units and will have easy access to AMC enabling them to intervene and infuse liquidity on exchange at all times.
difference between:
fixed maturity plans
vs
Fixed Deposit
vs
NCDs
vs
Mutual Fund (roll down maturity)
Vs.
#BharatBond ETF
👇
fixed maturity plans
vs
Fixed Deposit
vs
NCDs
vs
Mutual Fund (roll down maturity)
Vs.
#BharatBond ETF
👇
taxation (1/3):
Fixed Deposits & NCDs are the worst placed. For both bank FDs and NCDs, the interest earned during the year is to be accrued and is taxable at Marginal Rate of taxation of the holder.
suitable for investors in NIL or low tax bracket.
Fixed Deposits & NCDs are the worst placed. For both bank FDs and NCDs, the interest earned during the year is to be accrued and is taxable at Marginal Rate of taxation of the holder.
suitable for investors in NIL or low tax bracket.
taxation (2/3):
Fixed Maturity Plans & Debt Mutual Funds (assuming t>3 years)
The applicable taxation rate in this case is 20% with indexation. can also be timed for extra indexation.
Fixed Maturity Plans & Debt Mutual Funds (assuming t>3 years)
The applicable taxation rate in this case is 20% with indexation. can also be timed for extra indexation.
Target Maturity Index
Nifty BHARAT Bond Index – April 2023 & April 2030 index measures the performance of bonds AAA rated bonds issued by government owned entities maturing within 12 months prior to the maturity date of the index
#Bharatbond
Nifty BHARAT Bond Index – April 2023 & April 2030 index measures the performance of bonds AAA rated bonds issued by government owned entities maturing within 12 months prior to the maturity date of the index
#Bharatbond
Bharat Bond ETF will have two target maturities:
3 years (maturity on 15 April’2023)
No. of Constituents: 99 & No. of Issuer in the index : 13
10 years (maturity on 15 April’2030)
No. of Constituents: 50 & No. of Issuer in the index : 12
3 years (maturity on 15 April’2023)
No. of Constituents: 99 & No. of Issuer in the index : 13
10 years (maturity on 15 April’2030)
No. of Constituents: 50 & No. of Issuer in the index : 12
Issuer eligibility (1/2):
Issuing entity should be domiciled in India and should either be:
Central Public Sector Enterprises (CPSEs)
Maharatna
Navratna
Miniratna
PFIs
Statutory body
Issuing entity should be domiciled in India and should either be:
Central Public Sector Enterprises (CPSEs)
Maharatna
Navratna
Miniratna
PFIs
Statutory body
