The government is likely to roll out the country's first fixed income ETF including debt securities of as many as 12 PSUs by mid-December of this year. The ETF size is estimated to be the tune of Rs. 15000 to Rs 20000 crore. Further, only AAA rated instruments of these companies will form its part.
For retail and risk averse investors, this will be another investment option to earn better return than FD which provides a post tax return of 5.5% as well as high liquidity as these ETFs will be listed on the bourses.
The ETF will thus enable PSUs to borrow funds from the market.
Edelweiss Asset Management has been appointed as the asset manager for the proposed debt ETF. Notably , these debt ETFs are taxed similar to debt mutual funds.