Why am I calling it Landmark?

The ETF industry is vast and developed in the global market. In the US, the number of ETFs is more than listed stocks. If you are a prominent institutional investor, you can even make one another ETF as per your objectives. But in India, we don’t have that much large industry. Most ETFs are GOLD ETFs. But only till 2014.

In 2014, Then UPA govt decided to make CPSE ETF and give this opportunity to Goldman Sachs. So Goldman Sachs used its global expertise and developed an ETF containing 10 CPSE. It was the first try and went very well. It even outperforms Sensex.

But that fund also had big minus points like ONGC Holding 25%+ weight. A large part of it was FROM the POWER SECTOR. ONLY PFC AND REC were Finance Companies that were directly or indirectly connected with power. GOLDMAN SACH sold its Indian business shortly after it. Reliance Nippon Asset Management Company Bought it, and then again, NDA Govt came up with a tranche of it.

With the success of the new way of disinvestment, Govt went one step further and added Its SUUTI stake in ITC, L&T, and AXISBANK. This is Bharat 22.

There is one new Index constructed for it known as S&P BSE BHARAT 22

As you can understand, ONGC, NTPC, IOC, GAIL, COAL INDIA, BHARAT Electronics, Engineers India, REC, PFC, and Oil India exist in both ETFs.

Many of the companies in Bharat 22 are well managed, and so some investors are thinking of replicating it by buying the stocks individually. However, the main advantage of ETF is that it trades on exchange as one other security. So you don’t need to buy the securities in it differently.

The significant disadvantage I found while writing this is about three companies.

  1. SJVNL and NBCC. Well-managed companies having great potential still lower than 1 % weight and L&T and ITC holding significant weight?
  2. I don’t have any problem with SBI. Even BOB is also good, but why Indian Bank?

My view on most companies is good. One can invest 5-10% of the portfolio in this. Still, I believe you can individually invest in SJVN and NBCC.