Zerodha Fund House on Wednesday announced a new scheme and India’s first growth liquid exchange-traded fund (ETF)—Zerodha Nifty 1D Rate Liquid ETF. The fund is expected to be listed on the NSE and BSE exchanges by January 24.
The Zerodha Nifty 1D Rate Liquid ETF replicates the Nifty 1D Rate Index, which measures the returns generated by market participants lending in the overnight market. The ETF primarily invests in TREPS (Treasury Bills Repurchase) traded on the CCIL (Clearing Corporation of India Ltd) platform.
As the investment is made in short-term debt products backed by treasury bills, it carries a relatively low credit risk and low-interest rate risk. The fund may facilitate a seamless transition between equity and cash within the same settlement, thereby facilitating better cash management and, hence, suitable for all types of investors.
It is managed by Apurv Parikh, a seasoned professional in the financial industry.
Key details:
● Category: Other – ETF (Exchange Traded Fund)
● Benchmark: The Nifty 1D Rate Index
● Debt Fund Manager: Mr. Apurv Parikh
● Tentative listing date: 24th January, 2024
● Minimum Application Amount: Rs 500
Vishal Jain, CEO of Zerodha Fund House, said, “This new product from ZFH marks the arrival of liquid ETFs that offer a Growth NAV for the first time in India. This feature makes it easier to track the ETF’s performance. Additionally, the returns are taxed only when the ETF is sold, as compared to daily dividends, which are taxed continuously. To further enable more retail investors, the ETF will have a lower ticket size, starting with an NAV of 100.”
This product is suitable for investors who are seeking decent returns and want to take low risks. With a focus on maintaining liquidity while aiming for stable returns, this ETF managed by Parikh is designed to cater to investors seeking a balance between security and growth in their investment portfolio. Investment in securities covered by the NIFTY 1D Rate Index.
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The Nifty 1D Rate Index has been developed to measure the returns generated by market participants lending in the overnight market. The index uses the overnight rate provided through the Tri-Party Repo Dealing System (TREPS) for the computation of index values. The minimum application amount for the Zerodha Nifty 1D Rate Liquid ETF is Rs 500.
The product labelling assigned during the New Fund Offer (NFO) is based on an internal assessment of the scheme characteristics or model portfolio, and the same may vary post-NFO when actual investments are made.