How to Buy Bharat Bond & Bharat Bond ETF: Step-by-Step Guide

Introduction

Bharat Bond has emerged as a widely discussed name within India’s fixed-income ecosystem. Many investors search for clarity on what is Bharat Bond, how it differs from traditional bonds, and the practical steps involved in purchasing it.

This guide provides an educational, step-by-step explanation of how to buy Bharat Bond and Bharat Bond ETFs, explaining their structure, mechanics, and return drivers—without recommending or promoting any specific investment decision.

What Is Bharat Bond?

Bharat Bond is a series of debt instruments structured as exchange-traded funds (ETFs) that primarily invest in bonds issued by public sector undertakings (PSUs) and government-owned entities.

Key aspects of Bharat Bond:

• invests in PSU bonds

• follows a defined maturity structure

• aims to track a specified bond index

• offers transparency through index-based composition

Rather than being a single bond, Bharat Bond represents a portfolio of bonds bundled into an ETF format.

What Is Bharat Bond ETF?

A Bharat Bond ETF is an exchange-traded fund that:

• tracks a predefined bond index

• holds bonds until maturity

• provides exposure to multiple PSU issuers

• trades on stock exchanges like equity ETFs

Unlike actively managed debt funds, Bharat Bond ETFs follow a passive strategy, meaning the portfolio composition changes only as per index rules.

Key Features of Bharat Bond ETFs

✔ Defined Maturity Structure

Each Bharat Bond ETF has a fixed maturity year, after which the fund winds up and returns proceeds to investors.

✔ PSU Bond Exposure

Underlying securities are typically issued by public sector enterprises.

✔ Exchange-Traded Format

Units can be bought or sold on stock exchanges during trading hours.

✔ Index-Linked Portfolio

The ETF mirrors the composition of its benchmark bond index.

✔ Transparency

Holdings and maturity profiles are disclosed regularly.

How Bharat Bond ETF Returns Are Generated

Bharat Bond ETF returns are driven by:

1. Coupon Income

Interest payments received from underlying PSU bonds.

2. Accrual Until Maturity

Returns accrue as bonds move closer to maturity.

3. Market Price Movements

ETF prices may fluctuate based on interest-rate changes before maturity.

4. Reinvestment (Within Index Rules)

Coupons are reinvested as per index methodology.

Returns are not guaranteed and vary with interest rates and market conditions.

Who Typically Uses Bharat Bond ETFs?

Bharat Bond ETFs are commonly studied by:

• individuals exploring fixed-income exposure

• participants seeking defined maturity debt products

• those comparing bond ETFs with other debt instruments

• investors analyzing passive fixed-income strategies

Suitability depends on individual goals, time horizon, and risk tolerance.

Prerequisites Before Buying Bharat Bond

Before attempting to buy Bharat Bond ETF, ensure the following:

✔ Demat Account

Required to hold ETF units.

✔ Trading Account

Needed to place buy/sell orders on exchanges.

✔ Bank Account Linked to Trading Account

✔ Understanding of ETF Pricing

ETF prices fluctuate during market hours.

These prerequisites are similar to those required for equity ETF purchases.

How to Buy Bharat Bond ETF: Step-by-Step

Step 1: Identify the Bharat Bond ETF Series

Check the maturity year and index tracked.

Step 2: Log in to Your Trading Platform

Access your stock trading interface during market hours.

Step 3: Search for the Bharat Bond ETF

Use the ETF’s exchange ticker symbol.

Step 4: Check Market Price and Volume

Review liquidity, bid-ask spread, and last traded price.

Step 5: Place Buy Order

Choose order type:

• Market order

• Limit order

Step 6: Confirm Order Execution

Once executed, ETF units are credited to your demat account.

This completes the process of buying Bharat Bond ETF from the secondary market.

Buying Bharat Bond ETFs in the Secondary Market

Bharat Bond ETFs are commonly purchased via the secondary market.

Key points:

• prices fluctuate intraday

• liquidity may vary by series

• trading occurs like equity ETFs

• settlement follows exchange norms

Secondary market purchases do not involve buying bonds directly from issuers.

Things to Understand Before Buying

Before purchasing Bharat Bond ETFs, consider:

✔ Interest-Rate Sensitivity

Prices may move inversely to interest rates before maturity.

✔ Credit Concentration

Exposure is largely to PSU issuers.

✔ Liquidity Risk

Some ETF series may trade less actively.

✔ Holding Period Alignment

Returns align best when held until maturity.

✔ Tax Treatment

Taxation depends on prevailing debt taxation rules.

Understanding these factors helps set realistic expectations.

Common Misconceptions

Misconception 1: Bharat Bond is a guaranteed return product

Returns depend on market conditions and interest-rate movements.

Misconception 2: Bharat Bond ETF behaves like a fixed deposit

ETF prices fluctuate daily.

Misconception 3: ETFs eliminate all bond risks

Interest-rate and market risks still apply.

Misconception 4: Bharat Bond is a single bond

It is a portfolio of bonds packaged as an ETF.

Conclusion

Bharat Bond ETFs provide an index-based route to access PSU bond portfolios in a transparent, exchange-traded format. Understanding what is Bharat Bond, how its ETFs work, and the step-by-step process to buy Bharat Bond ETF helps individuals evaluate whether such instruments align with their financial planning framework.

As with all fixed-income instruments, outcomes depend on interest-rate movements, holding period, and broader market conditions.

Disclaimer

This blog is intended solely for educational and informational purposes. The bonds and securities mentioned herein are illustrative examples and should not be construed as investment advice or personal recommendations. BondScanner, as a SEBI-registered Online Bond Platform Provider (OBPP), does not provide personalized investment advice through this content.

Readers are advised to independently evaluate investment options and seek professional guidance before making financial decisions. Investments in bonds and other securities are subject to market risks, including the possible loss of principal. Please read all offer documents and risk disclosures carefully before investing.