Bharat Bond ETF 2020 – Review & LIVE Demo for Investing (हिंदी में) - YouTube

Namaskar, my name is Mukuk and welcome to Asset Yogi.

Friends, when we want to invest our money so two things are very important.

The first is returns and the second is risks.

Now everyone wants that they should earn good returns.

In fact, we also talk in our videos that we should in stocks, mutual funds

because there we can see good returns in long term.

But with that, there comes a risk too, especially when we talk about short to mid-term.

Now how we can manage these risks?

We can diversify our investments.

We can put some money in low-risk investments where we would see some stable returns.

So in this video, we will be talking about a product like this.

We will understand Bharat Bond ETF, it is a new product relatively.

We will understand its advantages and what types of risks and limitations it has?

And how can we invest in this product?

All these things we will get to know in this video. You stay tuned to this video.

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so you can follow our Master Investor series.

You will get the link of the playlist in the description below.

Let us first understand that, What is ETF?

Its full form is Exchange Traded Funds.

That is the funds that trade on the stock market either the Bombay Stock Exchange or the National Stock Exchange.

And these funds quite work like mutual funds.

Like mutual funds raises money from the public or the institution or the companies.

And then either invest that in the stocks or in the debt-securities.

In the same way ETF works, which raise money from the public or the institution or the companies.

And that money is invested in any type of security but here it follows some or the other index.

For example, if it is Stock ETF or the Equity ETF then it can follow NIFTY 50.

That is all the 50 companies in the NIFTY 50 and whatever their weightage is,

according to that, he will put that much money into those companies.

Similarly, it can be Gold ETF, he can follow the Gold's index so he will invest in gold.

There are also Debt ETFs like this, which invests in debt securities.

For example, there is a Liquid BeES ETF, which invests in government securities.

So just like this, there is a Debt ETF, which is Bharat Bond ETF.

And where does this Bharat Bond ETF invests?

It only invests in the AAA-rated bonds in the public sector enterprises.

And which types of enterprises are these? These are NTPC, NPCL, REC, NHAI, NABARD, HUDCO.

All the Public sector companies like this.

Whatever bonds they have, this ETF invests in that.

So how investment is done in the bonds of these companies?

So whatever be the maturity period of this ETF, let's say April 2025 is its maturity period.

So they will invest in such bonds which have maturity periods in April 2025.

So you on your maturity, whenever this ETF matures, you can easily redeem your money.

Other than this, 5% of the money is also invested in government securities to maintain liquidity.

And this Bharat Bond ETF is managed by Edelweiss Asset Management Company.

Let's here we talk about how would we get returns?

See here you will or get any quarterly or annual returns.

Whatever your money comes in the form of returns is re-invested.

That is like these funds invested in those companies, so the returns or the interest that will come from those bonds,

that money is re-invested in that bond so this works as a growth fund.

Your money that is re-investing is getting compound your overall amount.

And finally, on maturity, you get an overall lump-sum amount.

But here we can see how much we will get the indicative returns, so here are 2 schemes, the first is a 5-year scheme,

and the second is an 11-year scheme.

So the bonds that are maturing in April 2025, their indicative returns is 5.43%.

And the 11-year that is maturing in April 2031, their returns is near about 6.53%.

Let us talk about the advantages.

The first is higher safety because here all of our money is invested in AAA-rated bonds and that also in public sector enterprises.

So here our risk is very less.

Because somewhere there is the backing of the government so the risk of default is very less.

The second advantage is stable and predictable returns.

So as we talked earlier here the investment is done only in those bonds whose maturity period is in its line.

If here maturity period is April 2025.

So the investment is done in those bonds whose maturity period is in April 2025.

So there all the returns that we get, are passed on as it is.

And from here our third advantage comes out.

That its cost is very less.

You can assume it as the lowest cost fund in India.

Its cost, the management fee that is being charged is 0.0005%.

And here the fourth advantage is that it has no lock-in period.

Because this ETF is listed at the stock exchanges, they can be traded so you can buy or sell anytime.

In fact, in place of investing in the new offer, you can buy it from the secondary market.

And how to buy that? We will discuss it soon.

And the fifth advantage is diversification.

And see the diversification here is also of 2 types.

The first is like you put some money in the stocks, mutual funds so here you put some money in the bonds.

So in one way, it is diversified from here.

Furthur when you invested in this Bharat Bond ETF, you split it too, you didn't buy bonds of any particular company.

Let's say if any one of the companies defaults, so your risks are increased too much,

because here, investment is being done in multiple companies so our risks diversified more.

So here the sixth benefit that comes is Taxation.

If you sell this investment after 3 years, you will be charged long-term capital gains tax and which is 20%.

But there we get the benefit of indexation.

That is whatever the inflation rose, that inflation is subtracted from your profit.

The profit that remained is charged with 20%.

But yes, if you sell this investment before three years so you will be charged with short term capital gains tax.

Whatever profit you made is added to your income and according to your income tax slab, you will be charged tax.

Now we have seen the advantages of the Bharat Bond ETF, now here one more question comes out,

What is the difference between ETF and Mutual Funds?

See here are the two differences.

The first is that you can buy mutual funds directly through any mutual fund app

or through any bank or directly through any website of mutual funds.

But if you have to buy or sell an ETF especially in the secondary market so for that you will be needed a Demat account.

And how to do that? We will see it soon.

And the second difference is in price.

When we buy mutual funds so whatever the closing price of that day that is NAV closing,

at that, we will be having our buying price.

But if we want to buy the ETF, let's say we buy from the secondary market then its price gets fluctuates every second,

like the stock's prices fluctuate.

Now from here, our one more question comes out for what reason does this bond's price goes up and down?

See it is because of demand and supply.

And on what those demand and supply depend?

They depend on the current interest rate.

We will understand this in little detail.

And how depends on the interest rate?

If interest rates go down then the bond's price goes up and if the interest rate goes up then the bond's price goes down.

And why does this happen? we will understand this in detail with an example.

Let's say in today's date a bond came whose coupon rate was let's say 7% returns we were getting in it.

And let's say its price of one unit in today's date was Rs 1000.

Now in future let's say after 1 month one more bond is issued and at this time the interest rates have been fallen in the market.

Now the same type of bond is issued at 6%.

Now, what will people do?

People will think that why we will buy of 6%, instead of that why not we will buy of 7%.

So they will buy that in the secondary market, its demand will be increased that's why the price of that bond will increase.

So now when the interest rate is 6% of nay new bond then the price of an existing bond will go up.

So the bonds which were trading at the secondary market there prices went up.

Similarly, if interest goes in an upward direction then the bond's prices will go down.

So now we will quickly see how can we invest in Bharat Bond ETF?

Here we have two options.

The first is that we can invest in a new fund offer,

which is open from 14 to 17 July.

And in the coming time if there is a new issue then we can invest in it.

And here the minimum investment is Rs 1000.

So if we want to invest in a new fund offer so we can do that from the website of www.bharatbond.in.

So see that you will get all the information on the websites of www.bharatbond.in,

you can go downwards and check out all information.

Now if you have to invest in it you will go into invest now and here you can enter your investment amount.

Let's say if you want to invest Rs 20,000 so here you will enter Rs 20,000.

You can take a look at the investment horizon, as we talked that there are two schemes, one's maturity is on April 2031,

or on April 2025, you can select that here.

And see here we are getting two options,

the one option is ETF, if we want to invest in ETF then for that we will be required a Demat account.

And by chance, if we don't have a Demat account then we can invest in Funds of Funds.

And the fund goes and invests into the ETF, so these funds of funds work like a mutual fund.

so now if we take ETF then we will proceed, then after that, you can enter your details here like PAN, email id and mobile no.

and after that, you will enter your DP Id.

Whichever is your Demat account there you get a DP id, you will enter it and fill in the rest information.

And with that whatever is your amount you can pay it through net banking or UPI.

So this was a way to invest in the new fund offer.

Now if we want to buy or sell in the secondary market then for that we will be needed a Demat account.

If you have a Demat account at any of the stockbrokers, then from there you can buy or sell it.

Now we will see a demo that how to do it in the Zerodha kite?

And the same process is in your Upstox or in any other stockbrokers there is a quite similar process.

And if you don't have any Dema account then you can open it in Zerodha or Upstox, below I will provide you with the links.

Both are reputed & discount brokers.

Let us see quickly how we have to buy or sell in the secondary market.

So to purchase the Bharat bond ETF in the secondary market you will log in to your Demat account.

For example hee I have logged in to the Zerodha kite.

After that, you will go to your watchlist and search for EBBETF.

For example here an ETF of expiry of April 2023 is visible, one ETF of April 2030 is also visible.

If let's say we want to purchase for April 2023, then we will click on it.

Then we will go to buy, look here its current price is going about Rs 1079, the existing issue price of Rs 1000 is now of 1079.

Now we have to purchase so by going on CNC either we put limit order or market order.

Market order, if we want to buy at market price, if we want to ensure that we have to buy this script

then we buy it from going on the market order.

The order will be executed on whatever will be the existing market price.

But if we want that we set our price on our own then for that we have to do limit order.

And in a limit order, we can set our price.

For example, here I will set my price let's say instead of Rs 1079 I want to buy at Rs 1070.

After that, if we have to buy then here I have seen that regular order is set, the limit order is been set.

And if I have to purchase that then I will swipe that on the right side to buy.

Our order has been placed.

Now we can go back and see it in the order list, you can see in the orders it is an open order.

So if someone is ready to sell at 1070 then this will be executed.

So we have seen the whole process to invest in the Bharat Bond ETF of the Primary and secondary market.

Here our one thing is left and that is our risk and limitaions.

Every investment has some risks, so here comes our first risk and which is price risk.

What is the meaning of price risk?

Look because these bonds are been traded, here their prices depend on the demand and supply.

So their returns are not fixed.

Whenever you will sell, prices will be decided according to the interest rates that will be going on at that time.

Which we talked about earlier.

The second is that the fund invested in the bonds, those bonds interest rates can also go up and down.

Like when we will get the coupon's money from those bonds, that money will be reinvested in those bonds.

The interest rate at that time can go up and down.

So here you will not get the 100% guaranteed returns.

Reasonable we can say that here we will get stable and predictable returns.

The second risk is credit and capital risk.

Here your capital protection is not guaranteed as you get are getting guaranteed for something in FD's.

That type of guarantee is not guaranteed here If any public sector enterprises default.

So your capital can be lowered according to that, you can do right-off your funds.

But that risk is lowered very much because it is been managed nicely.

And how is it managed? Because here money is invested AAA-rated bonds and that also public sector enterprises.

Here somewhere there is the backing of the government.

And here the third risk that comes is Liquidity risks.

If maybe you go to sell but at the price, you want to sell maybe you won't find any buyer at that price.

So it depends on what types of volumes are traded on the stock markets, on a particular day or time.

So finally the question arises that should we invest in this or not?

So definitely if you want to diversify your portfolio, if you want to some of your money in safe returns,

then it can be a very nice product.

Especially, the long term bond about which we are talking where you are seeing returns of more than 6.5%.

So it can be a good product.

So if you liked this video then please like and share it with your family and friends.

Maybe they are also looking for this type of product, where they will get stable returns with low risks.

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Till then keep learning, keep earning and stay happy as always.