Monday, January 6, 2020

The Bharat Bond ETF is not without risks

The Bharat Bond ETFs are here and those in the investment ecosystem in India can’t stop talking about them. Asset managers, advisers and the media have all expressed their opinion, which is largely positive and salutary.

The Bharat Bond ETF is, after all, a brand-new investment product; an option that investors didn’t have yet. It’s certainly different; but, does that make it necessarily better? Let’s take a deeper look.

How it compares with other options

The Bharat Bond ETF offers a unique combination of relative return certainty (if held to maturity), beneficial tax treatment (if held for more than three years) and liquidity (if one needs to exit before maturity – as the ETFs will be listed on the exchanges).

Returns from a bond instruments such as debt mutual funds, when held for at least three years, get taxed at a rate of 20 percent, with indexation benefits as well.

TO read more, click here

This note was published on on December 16, 2019

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