Why is it in the news ?
The Further Fund Offer 2 (FFO 2) of Bharat 22 ExchangeTraded Fund (ETF), is due to open for subscription for anchor investors cum non-anchor investors.
What are Anchor investors?
- This concept was introduced by SEBI in 2009.
- It defines Anchor investors as the institutional investors who are offered shares in an IPO a day before the offer opens.
- As the name suggests, they are supposed to ‘anchor’ the issue by agreeing to subscribe to shares at a fixed price so that other investors may know that there is demand for the shares offered.
- Each anchor investor has to put a minimum of ₹10 crore in the issue.
What is the Bharat 22 ETF ?
It is a basket of bonds issued by Central Public Sector Undertakings (CPSUs), Central Public Sector Enterprises (CPSEs), Central Public Financial Institutions (CPFIs) and other government organizations.
Exchange Traded Funds
- Conceptually, it can be defined as a collection of Securities/Bonds may be traded on the stock exchange.
- The trading value of an ETF depends on the Net Asset Value (NAV) of the underlying stocks/Bonds in the basket.
- They are traded throughout the day like Stocks, and distinctively from Mutual funds which are traded once a day after market close.
- The number of underlying stocks in an ETF may vary from hundreds to thousands across various industries or even restricted to any particular Industry.
- Though the ETF does not give a very high return but it gives the opportunity of safe investment which equity does not provide.
Further fund offer (FFO)
- A further fund offer (FFO) is a subsequent offering in a mutual fund, typically an exchange-traded fund (ETF), from the issuer.
- FFOs in India have usually been a feature of government ETFs such as CPSE ETF and Bharat 22 ETF.
FFO vs FPO (Further public offer/Follow on Offer)
- FFO applies to mutual funds while FPO applies to stocks.
- An FFO is the issue of a tranche of units in a mutual fund after its launch while in an FPO, an already listed company issues shares to the public afresh.