Bharat 22 ETF: The Government’s Other Disinvestment ETF and What Sets It Apart

Most people who hear “PSU ETF” think of a basket of government-run companies. The Bharat 22 ETF doesn’t quite fit that picture. Its two biggest holdings are Larsen & Toubro and ITC, and Axis Bank sits in the top five. None of them is a public sector company. That one detail tells you most of what makes this fund different from its better-known cousin, the CPSE ETF.

The Bharat 22 ETF is managed by ICICI Prudential Mutual Fund and tracks the BSE Bharat 22 Index. The government used it as a disinvestment tool: instead of selling stakes company by company, it sold a ready-made basket to investors through a fund. In this guide we go through how the index is built, what the fund holds now, what it costs, how it has performed against its benchmark, and a worked example in rupees so you can see what a single investment actually buys.

What the Bharat 22 ETF is, in plain terms

It is an open-ended exchange traded fund. According to the scheme summary document filed on AMFI, its objective is to invest in the constituents of the underlying index in the same proportion as the index and give returns, before expenses, that closely track the index’s total return. It may not match the index exactly, because of tracking error, and the document says plainly that there is no guarantee the objective will be achieved.

Some dates and basics from that same document:

• The new fund offer opened for anchor investors on 14 November 2017 and for non-anchor investors on 15 November 2017, closing on 17 November 2017.
• Units were allotted on 24 November 2017.
• The face value is ₹10 per unit, and the riskometer is “Very High”, both at launch and in the latest reading.
• The benchmark is the BSE Bharat 22 TRI, the total return version of the index, which adds back dividends.
• At least 95% of assets go into index stocks. Up to 5% can sit in liquid or money market instruments and cash.

The September 2026 factsheet lists the trading symbol as ICICIB22 on both NSE and BSE, with BSE scrip code 540787. On the exchanges you can buy a single unit. Buying directly from the AMC needs 4,300 units or multiples of that, which is meant for large investors and market makers rather than retail.

Where the stocks come from: the four eligibility routes

This is the part that sets the fund apart. The scheme information document of the ICICI Prudential Bharat 22 FOF, which invests in this ETF, describes the index as measuring “the performance of selected companies disinvested by the Central Government of India according to its disinvestment program.” Companies listed on BSE are eligible if they fall in any of four groups:

1. Companies classified as Central Public Sector Enterprises (CPSEs) by the government.
2. Companies classified as Specific Undertaking of the Unit Trust of India (SUUTI).
3. Public sector banks.
4. Any other company disinvested by the Government of India.

Routes two and four are why private-sector names show up. The CPSE ETF, which we covered in our guide to how the CPSE ETF works, sticks to central public sector companies. Bharat 22 casts a wider net, so it ends up with large private companies alongside NTPC, ONGC and Coal India.

There is a liquidity filter too. Each constituent must have an average impact cost of 1% or less over the previous six months. Impact cost is roughly the extra price you pay because of the spread and depth of the order book when you trade a set amount. A low cap keeps out thinly traded stocks that would be hard for the fund to buy and sell.

The 15% and 20% caps, and why they matter

The index is weighted by market capitalisation, but with limits. The SID states that no single stock can be more than 15% of the index and no BSE sector can be more than 20%. Both caps are applied at the annual rebalancing. The index service provider named in the document is Asia Index Private Limited.

Two practical points follow from this.

First, the caps are a reset, not a ceiling that holds every day. They apply at rebalancing. If L&T rallies hard after a rebalance, its weight can drift above 15% until the next reset trims it back. That is exactly what we see now: in the March 2025 constituent list, L&T was 15.48%, and in the September 2026 portfolio it was 15.59% of the fund’s net assets.

Second, the sector cap spreads the risk more than a pure market-cap weighting would. Even so, the fund is far from diversified in the way a Nifty 50 fund is. Twenty-two stocks, five sectors close to the cap, and a handful of names doing most of the work.

The caps reset the weights once a year. In between, a strong rally in one stock can push it past 15%, and the fund simply holds it there until the next rebalance.

What the fund holds right now

Here are the ten largest holdings as a share of net assets, from the factsheet portfolio dated 30 September 2026:

Add those up and the top ten come to 84.42% of the fund. The top five alone are 56.12%. Outside the top ten, the factsheet lists Bharat Petroleum (3.55%), GAIL (2.77%), Indian Oil (2.96%), NHPC (1.43%) and Power Finance Corporation (1.05%), with holdings under 1% each adding up to 3.79%.

By sector, the factsheet shows Oil, Gas & Consumable Fuels at 20.37%, Financial Services at 20.13%, Power at 19.35%, Construction at 16.18% and FMCG at 14.23%. Capital Goods (4.96%) and Metals & Mining (4.78%) round it out. Notice how the first three sit right around the 20% sector cap.

The group exposure table is worth a look as well. The factsheet puts “Government of India” group exposure at 38.25%, with separate lines for “Government of India – SBI” at 8.87% and “Government of India – BPCL” at 3.55%. L&T Group is 15.59%, ITC (listed as “MNC Associate – ITC”) is 14.23% and Axis Bank is 7.79%. Put simply, a large share sits with state-controlled companies, and a big chunk of the rest is in three private names.

How the line-up has shifted

The SID’s index constituent list as on 31 March 2025 named 22 companies. At the top were L&T (15.48%), ITC (14.08%), NTPC (10.14%), Axis Bank (8.15%), Power Grid (7.90%) and SBI (7.68%). At the bottom were small weights in Indian Bank (0.49%), NLC India (0.47%), SJVN (0.39%), NBCC (0.36%) and Engineers India (0.19%). Compare that with September 2026 and you can see SBI moving above Axis Bank, and NTPC slipping just below 10%. The fund is the same 22-stock idea, but the order changes with prices and the annual reset.

Costs and size

The factsheet shows a base expense ratio of 0.06% a year, as on the last business day of the month. That is very low, even by ETF standards. Remember you also pay brokerage and a bid-ask spread when you buy or sell on the exchange, and those can matter more than the expense ratio for small, frequent trades.

As of 30 September 2026, the fund’s monthly average AUM was ₹9,800.55 crore and its closing AUM was ₹9,530.99 crore. The NAV that day was ₹110.2682 per unit.

How it has done against its own index

For an index fund, the first question isn’t “did it make money?” but “did it follow the index?” Here are the factsheet returns to 30 September 2026 (CAGR for periods above one year):

In rupee terms, the factsheet shows ₹10,000 invested five years earlier growing to ₹24,336.50 in the ETF, against ₹24,640.62 in the benchmark and ₹13,620.86 in the Nifty 50 TRI.

Two things jump out. The fund trailed its index by a fraction of a percentage point each year, which is what a well-run index fund should do. The factsheet’s tracking difference figures are -0.19% over one year, -0.26% over three years and -0.30% over five years. And over this particular stretch, the PSU-heavy, value-tilted basket did far better than the Nifty 50. That second point is about this five-year window, not a rule. Past performance may or may not be sustained, as the factsheet itself says, and a sectoral basket can lag the broad market for long periods too.

Judge an index ETF on how closely it follows its index. Judge the index on whether you actually want that mix of stocks.

A worked example in rupees

Let’s take a hypothetical investor, Meera, who puts ₹1,00,000 into the Bharat 22 ETF. The prices and amounts here are made up for illustration. The weights are the real September 2026 portfolio weights.

Step 1: Units bought. Say the ETF trades at ₹110 on the exchange. ₹1,00,000 ÷ ₹110 = 909.09, so she can buy 909 whole units for ₹99,990, leaving ₹10 plus whatever brokerage she pays.

Step 2: What she owns underneath. Using the September weights on roughly ₹1,00,000:

• L&T: 15.59% = about ₹15,590
• ITC: 14.23% = about ₹14,230
• NTPC: 9.64% = about ₹9,640
• SBI: 8.87% = about ₹8,870
• Axis Bank: 7.79% = about ₹7,790

That is ₹56,120 in five stocks. If she already holds ITC and L&T directly, or owns a large-cap fund where both are big weights, this ETF adds to that same exposure rather than spreading it.

Step 3: Annual cost. At a 0.06% expense ratio, the fund’s running cost on ₹1,00,000 works out to about ₹60 a year. That is charged inside the NAV, so she never sees a bill.

Step 4: A stress check. Suppose, hypothetically, that power stocks fall 20% while everything else stays flat. Power is 19.35% of the fund by the factsheet’s sector table. A 20% drop on that slice is 19.35% × 20% = 3.87%, so her ₹1,00,000 would fall by about ₹3,870 on that move alone. Run the same check for oil and gas, or for financials, and you get a similar number, because each of those sectors is close to a fifth of the fund.

Step 5: Price vs NAV. On the exchange, the ETF’s price can sit a little above or below the value of its holdings. If the indicative NAV is ₹110.00 and the screen shows ₹110.40, she is paying about 0.36% over value. On a liquid ETF that gap is usually small, but it is worth checking before placing a market order.

Bharat 22 ETF vs CPSE ETF: the real difference

Both came out of the government’s disinvestment programme, and both are often lumped together as “PSU ETFs”. The difference is the eligibility list. CPSE ETF is restricted to central public sector enterprises. Bharat 22 also takes SUUTI holdings, PSU banks and other disinvested companies, which brings in L&T, ITC and Axis Bank, together about 37.61% of the fund in September 2026.

For you as an investor, that means Bharat 22 is less of a pure bet on government-owned companies. You are getting a mix of state-run utilities and energy firms, a big infrastructure company, a diversified FMCG company and two large banks. Whether that mix suits you depends on what else you own.

If bond-side disinvestment products interest you too, our explainer on the Bharat Bond ETF and its target maturity structure covers the debt equivalent.

Who might use it, and the catches

The fund can make sense for someone who wants low-cost exposure to large state-linked companies plus a few big private names, without picking stocks one by one.

The catches are real, though:

• Concentration. Five stocks make up over half the fund. One bad quarter at L&T or ITC moves the whole thing.
• Policy risk. Many holdings are state-controlled. Government decisions on pricing, dividends, stake sales or sector policy can hit them in ways that don’t affect private peers.
• Sector bunching. Energy, power and financials each sit near 20%. That is a cyclical mix.
• Trading costs. The 0.06% expense ratio is cheap, but brokerage, the spread and any premium to NAV are on you.

Treat it as a satellite holding, sized so that a bad patch for PSU stocks doesn’t derail your plan. Our pillar guide on risk management has more on sizing positions so that no single bet does too much damage.

Quick checklist before you buy

1. Open the latest factsheet and read the top ten holdings and sector split.
2. Check how much L&T, ITC, SBI and NTPC you already own through other funds.
3. Compare the live price with the indicative NAV on the exchange before ordering.
4. Use a limit order, not a market order.
5. Look at tracking difference, not just headline returns.
6. Decide in advance how much of your equity money this basket should be.

The short version

The Bharat 22 ETF is a 22-stock basket built from the government’s disinvestment list, with a 15% cap per stock and a 20% cap per sector reset every year. Its wider eligibility rules bring in L&T, ITC and Axis Bank, which is the main thing that separates it from the CPSE ETF. It is cheap to hold, has tracked its index closely, and has beaten the Nifty 50 over the last five years. It is also concentrated, sector-heavy and exposed to policy decisions. Know what you are buying, and size it accordingly.

Disclaimer: This article is for educational purposes only and is not investment advice. The investor, prices and amounts in the worked example are hypothetical; portfolio weights and returns are taken from the fund’s published documents as of the dates stated. Mutual fund and ETF investments are subject to market risks; read all scheme-related documents carefully and consult a SEBI-registered investment adviser before making investment decisions.