Zerodha Nifty 1D Rate Liquid ETF crosses Rs 1,000 crore AUM

Zerodha Mutual Fund announced that Zerodha Nifty 1D Rate Liquid ETF crossed Rs 1,000 crore assets under management (AUM). The unique scheme from the fund house marked the arrival of Liquid ETFs that offer a growth NAV for the first time in India, according to a press release from the fund house.

The fund was launched on January 24. Zerodha Nifty 1D Rate Liquid ETF is benchmarked against 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 overnight debt products backed by treasury bills, it carries a relatively low credit risk and low-interest rate risk.

The ETF may facilitate a seamless transition between equity and cash within the same settlement, thereby facilitating better cash management, and hence may be suitable for all types of investors. Unlike the returns of other Liquid ETFs, the returns in the Nifty 1D Rate Liquid ETF are reflected in its day-to-day NAV movement instead of paying out dividends.

“Over 60,000 investors have started using this ETF as a simple and effective way to manage cash with a relatively low-interest rate risk and credit risk. LIQUIDCASE, which is India’s first Liquid ETF with Growth NAV, reaching the Rs 1,000 crore AUM mark is a significant accomplishment in our journey of simplifying products and enabling greater reach and participation,” said Vishal Jain, CEO, Zerodha Fund House.

“LIQUIDCASE is the innovation this market was waiting for so it is not surprising that it is gaining traction in the market. It removes dividend accounting and tracking hassle, making it simple to use to take cash positions. In addition, the ability to transact large volumes close to NAV ensures minimal slippage,” said Deepak Shenoy, Founder, Capitalmind.Liquid ETFs invest in overnight debt securities like Tri-Party Repo, Repo, Government Securities, Reverse Repos, and other similar instruments. About 99% of the Liquid ETF allocation is towards Tri-Party Repo which is traded through the CCIL platform and as it is fully collateralized by government securities, hence carries minimal or low risk.

Apart from the Liquid ETF, the fund house manages three schemes – Zerodha Nifty LargeMidcap 250 Index Fund, Zerodha ELSS Tax Saver Nifty LargeMidcap 250 Index Fund and Zerodha Gold ETF.

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