If an investor had put ₹10 lakh in the fund on Monday, he would get ₹10.379 lakh on maturity on April 23, 2023, an absolute gain of ₹37,900 before taxes.
“If you hold till maturity, you can earn about 150-175 basis points higher returns than bank fixed deposits with good liquidity,” said Harshvardhan Roongta, CFP, Roongta Securities. A fixed deposit with
of six months to a year would fetch 4.65% in interest, while that with for 180-210 days would return 4.4%.
Bharat Bond ETF – April 2023, managed by Mutual Fund has assets under management (AUM) of ₹6,314 crore and has a portfolio of AAA-rated public sector bonds. Since ETFs are listed, investors can only buy them through stock brokers. Investors who want to buy Bharat Bonds from the fund house could purchase the fund of fund (FoF) which has an expense ratio of 5 basis points.
“Investors looking to rebalance equity portfolios by trimming equity and allocating to debt could consider the Bharat Bond April 2023 ETF, given the high-quality portfolio and visibility of returns,” said Nirav Karkera, head of research, Fisdom.
Wealth advisors have been recommending investors to take some profits off the table, after the 16% run-up in the Nifty 50 in the last three months.
While AAA-rated papers of longer tenures such as five years can yield higher returns of 7.25%, they come with mark-to-market risk.
“Fixed income investors are wary of allocating money to long tenure debt as they fear a mark-to-market loss if interest rates were to rise,” said Suvajit Ray, head (product and distribution),
.
Investors will, however, pay short-term capital gains tax if they were to put money in this product now. The tax rates on short-term capital gains in this debt ETF maturing in April 2023, will be as per the applicable income tax rate, in line with that in fixed deposit. For an investor in the highest tax bracket, she must pay 30% tax plus surcharge.
