Maintain margin-ready liquidity between trades without leaving funds idle.
Simple, efficient, and accessible. It’s a disciplined place for your short-term cash.
Large sums, minimal friction, and instant liquidity when required.
A liquid ETF is an exchange-traded fund that invests in Triparty Repo Agreements (TREPS).
These ETFs aim to provide short term parking of excess or extra cash and allow investors to buy or sell units on the stock exchange at market prices during trading hours. They track benchmarks that reflect overnight interest rates.
A Liquid ETF puts your money in overnight, low-risk instrument (Tri Party Repo) that earn a small amount of interest every day. This daily interest gets added to the iNAV. You buy and sell units on the exchange through your demat account, just like a stock. When you buy or sell, the units and the money typically comes back to you on T+1.
The primary objective of a liquid ETF is your money is invested in TREPS to generate returns that correspond to the overnight interest rate. Thus, liquid ETF is a useful tool for the investor to park their short term idle surplus cash.
Investing in a liquid ETF requires a demat and trading account with a SEBI-registered broker. Investors can search for the ETF's ticker symbol on the stock exchange (NSE/BSE) and place buy orders through their broker's platform.
The minimum investment lot is one unit, and the amount is determined by the prevailing market price of the ETF at the time of purchase. Brokerage charges and statutory levies may apply as per the investor's trading platform.
Liquid ETF transactions follow the standard stock-exchange settlement cycle. Sale proceeds are credited to the investor's account once settlement is completed, typically T+1 for many listed securities subject to the broker's settlement timelines.
A liquid ETF is traded on stock exchanges and requires a demat and trading account, with prices determined by the spread around iNAV. A traditional liquid mutual fund is bought or redeemed directly with the AMC at the end-of-day NAV. Liquid ETFs track indices based on overnight interest rates (TREPS), while liquid funds may invest across a broader range of money-market instruments with maturities up to 91 days.
Liquid ETFs are classified as debt-oriented schemes for taxation purposes. Capital gains tax depends on the holding period and applicable tax rules, which may be subject to change. Investors should consult a tax advisor for guidance specific to their individual circumstances.
Liquid ETFs levy an expense ratio as per SEBI regulations, detailed in their SID and fact sheets. When trading on the exchange, investors may incur brokerage charges, GST and other applicable fees as per their broker's tariff.
Liquid ETFs provide intraday liquidity through stock-exchange trading, daily accrual of income from overnight money-market instruments. Their portfolios consist of very short-maturity securities (1-Day maturity security TREPS), which can result in lower interest-rate sensitivity than longer-duration debt instruments. All transactions require a demat and trading account.
DSP offers two liquid ETFs that track overnight rate indices:
Both ETFs are listed on NSE and BSE and can be bought or sold intraday through a demat and trading account.
Have more questions? Give us a missed call on
+ 91 7738000030
