Edelweiss PSU debt ETF to use a target maturity structure


The cabinet has approved the launch of the Bharat Bond ETF
Unit size: Rs 1000 for the ETF. NAV of the FOF will be Rs. 10 during the NFO period but Edelweiss has yet announce the minimums.
Expense ratio: 0.0005 percent

NFO Date: 12th December to 20th December

The NFO of the Bharat Bond ETF (PSU Debt ETF) is set to open in December, probably 2 to 3 week. I am hearing December 19th as the NFO close date. Will keep the post updated. So, I was assuming that the AMC would launch multiple series for each year, but that’s not the case. There will be 2 series – 2023 and 2030. Essentially 2 ETFs, that will expire in the year 2023 and 2030. 3 years because of the indexation benefit. But still this is a really cool structure because of the defined maturity, you clearly know what the duration risk is.

Last year, in the budget, the govt had announced that along with CPSE and Bharat 22 ETFs, it wanted to raise money through a debt ETF. Post the bidding, Edelweiss Asset Management won the mandate to launch the debt ETF. We finally have details on how the ETF will be structured, and it’s quite interesting!

Clickity click, click!

Expense ratios in the US are hitting rock bottom. But investors in India still don’t care about costs

Was reading the Q4 trend reviews by Morningstar and came across this stunning graph. Well, if you even have the elementary understanding of trends in mutual funds, then you’d be aware that there is a great cost migration in the US. i.e. from active to passive and this has resulted in a massive fee war, largely perpetuated by Vanguard. Today, in the US, you can build a core portfolio at a cost of less than 10 basis points – that’s goddamn crazy.


Back home in India, Indian investors are still being ripped off with high expense ratio funds being showed down their unwitting throats by distributors. The sad truth is that Indian investors don’t give a shit about costs. If they did, then they wouldn’t get sucked in such funds. It looks like we still have a long time to go before investors realize the importance of costs.

I was just checking Morningstar and I found 27 close ended funds which had 3% expense ratios, that’s is crazy!

FundExpense Ratio
BOI AXA Midcap Tax Fund – Series 1 Regular Dividend3.25
BOI AXA Midcap Tax Fund – Series 1 Regular Growth3.25
Sundaram LT Tax Ad Sr IV Reg DP3.14
Sundaram LT Tax Ad Sr IV Reg Ds3.14
Sundaram LT Tax Ad Sr IV Reg Gr3.14
Sundaram Multi Cap Ser II Regular Dividend Payout3.14
Sundaram Multi Cap Ser II Regular Dividend Sweep3.14
Sundaram Multi Cap Ser II Regular Growth3.14
SBI Tax Advantage Fund Series II Dividend3.13
SBI Tax Advantage Fund Series II Growth3.13
SBI Long Term Advantage Fund Series I Regular Dividend3.11
SBI Long Term Advantage Fund Series I Regular Growth3.11
SBI Long Term Advantage Fund Series II Regular Dividend3.1
SBI Long Term Advantage Fund Series II Regular Growth3.1
SBI Tax Advantage Fund Series III Regular Dividend3.1
SBI Tax Advantage Fund Series III Regular Growth3.1
Sundaram Multi Cap Ser I Regular Dividend Payout3.07
Sundaram Multi Cap Ser I Regular Dividend Sweep3.07
Sundaram Multi Cap Ser I Regular Growth3.07
Sundaram Emerging Small Cap Ser V Regular Dividend Payout3.04
Sundaram Emerging Small Cap Ser V Regular Dividend Sweep3.04
Sundaram Emerging Small Cap Ser V Regular Growth3.04
Sundaram Emerging Small Cap Ser VI Regular Dividend Payout3.02
Sundaram Emerging Small Cap Ser VI Regular Dividend Sweep3.02
Sundaram Emerging Small Cap Ser VI Regular Growth3.02
Sundaram Emerging Small Cap Ser VII Regular Dividend Payout3.01
Sundaram Emerging Small Cap Ser VII Regular Growth3.01

In spite of the recent reduction in expense ratios, there are still 6 open-ended regular mutual funds with expense ratios of more than 3%.

FundExpense Ratio
Reliance Consumption Fund3.15
Baroda Midcap Fund3.07
Principal Dividend Yield Fund3.01
Canara Robeco Bluechip Equity Fund3
DHFL Pramerica Diversified Equity Fund3
Union Value Discovery Fund 3

This is in spite of passive funds and ETFs being available for almost free

Nifty 50 index funds
FundExpense ratio
UTI Nifty Index Fund0.0013
HDFC Index Fund-NIFTY 50 Plan0.001
ICICI Prudential Nifty Index Fund0.0032
SBI Nifty Index Fund0.0025
Franklin India Index Fund – NSE Nifty Plan0.007
Nifty Next 50 index funds
FundExpense ratio
UTI Nifty Index Fund0.0013
HDFC Index Fund-NIFTY 50 Plan0.001
ICICI Prudential Nifty Index Fund0.0032
SBI Nifty Index Fund0.0025
Franklin India Index Fund – NSE Nifty Plan0.007
Nifty 50 ETF
ETFExpense ratio
SBI ETF Nifty 500.0007
UTI Nifty Exchange Traded Fund0.0007
Reliance ETF Nifty BeES0.0011
ICICI Prudential Nifty ETF0.0005
Kotak Nifty ETF0.001
Nifty Next 50 ETF
ETFExpense ratio
Reliance ETF Junior BeES0.0023
Aditya Birla Sun Life Nifty Next 50 ETF0.0005
UTI Nifty Next 50 Exchange Traded Fund0.0022
SBI ETF Nifty Next 500.002
ICICI Prudential Nifty Next 50 ETF0.0015

I haven’t really accounted for tracking error and nor have I sorted these funds based on how cheap they. Even so, they are damn cheap. Any investor today, can certainly do worse than a combination of Nifty 50 + Nifty Next 50