Zerodha Fund House (ZFH) on Tuesday said that its Growth Liquid ETF, Zerodha Nifty 1D Rate Liquid ETF, has crossed Rs 1,000 crore in assets under management (AUM).
Zerodha Nifty 1D Rate Liquid ETF, launched on January 24 this year, distinguishes itself as India’s first liquid exchange-traded fund (ETF) with a growth NAV.
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 overnight debt products backed by treasury bills, it carries a relatively low credit risk and low interest rate risk, Zerodha Fund House said.
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.
Vishal Jain, CEO, Zerodha Fund House expressed his views on the milestone, “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 1000 crore AUM mark is a significant accomplishment in our journey of simplifying products and enabling greater reach and participation.”
Deepak Shenoy, Founder, Capitalmind said, “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.”
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.
Last month, the AMC also hit Rs 1,000 crore in total AUM. Apart from the liquid ETF, it currently has three schemes – Zerodha Nifty LargeMidcap 250 Index Fund, Zerodha ELSS Tax Saver Nifty LargeMidcap 250 Index Fund and Zerodha Gold ETF.