All about LIQUIDCASE, India’s first growth liquid ETF by Zerodha Fund House

LIQUIDCASE is a liquid ETF which invests in overnight instruments like Tri-Party Repo on Government Securities or T-bills, Reverse repo, Cash & Cash equivalents. It aims to provide easy liquidity at relatively low risk and tracks Nifty 1D Rate as its benchmark. This ETF offers a simple and effective way to manage cash with a relatively low interest rate and credit risk.

It offers a growth NAV, which means that the returns are reflected in its day to day NAV movement instead of paying out dividends. This essentially makes it much easier to track and maintain this ETF and removes dividend related complexities. It also makes it tax efficient, as you are taxed only when you redeem your investments, unlike other ETFs that pay dividends where you are taxed continuously.

This ETF can be a good choice to park between trades as helps transition between Equity and Cash within the same settlement. It can also be pledged once it is approved by the Clearing Corporation.

LIQUIDCASE is now listed on BSE/NSE exchanges and enough liquidity is ensured by the scheme

Investors can in LIQUIDCASE invest in through any of the broker apps including kite.

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I had asked a question here

LIQUIDCASE, India’s first ETF with a growth NAV from @ZerodhaAMC - Zerodha - Trading Q&A by Zerodha - All your queries on trading and markets answered (tradingqna.com)

Hey Chirag,

Thank you for your question.

This is India’s First Liquid ETF with a growth NAV. Based on the underlying investments made in Overnight Debt instruments, in a growth NAV the returns would be directly reflected in the NAV on a day-day basis. The NAV as of closing Jan 28th, 2024 is 100.2896.

Most existing Liquid ETFs are daily dividend paying in which the NAV is constant on a daily basis and returns are in the form of additional units / cash dividend paid out at regular intervals.

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thanks, but i was asking about the sell side premium on launch day of 20p.
With current 6.5-7%p.a, daily nav growth would be at 2p per day.
Since launch day, there is a 20p premium, is that the AMC cost for supplying liquidity?

Hey Chirag,

The NFO of LIQUIDCASE closed on 12th Jan and the securities were listed on the exchange on 24th Jan. During this period of 12 days, the monies received from investors were invested as per objective of scheme i.e. TREPS. Allotment to investors was made on Jan 17, 2024 at a price of 99.9950 and the NAV as on Jan 23, 2024 was 100.1995 which reflects the returns/accumulation of interest in the ETF. Hope this answers your queries.

very good, thanks

Thanks Vishal and team for this. Solves a lot of problems. After this, any other liquid ETF makes zero sense.

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Hello, may I ask about all charges which will be applicable?

  • Brokerage, I am assuming will be NIL if thru Zerodha
  • but what about STT etc.? Will it make sense to park money for short durations in this?

thanks

So, If I am having LiquidCase in my Demat and need to buy XYZ Stock, Can i Sell Liquidcase and buy that XYZ Stock in the same trading session without me bringing fresh funds?

Also, what if its pledged? Can i still expect the settlement of buying of XYZ Stock and Sale of LiquidCase to happen on the same Settlement Day?

Hello,

Thanks for showing interest in LIQUIDCASE.

As LIQUIDCASE is a debt product, there is no STT applicable.

However, on listed debt products there are applicable Stamp Duty charges which are 0.015% on the BUY side and NIL while selling.

While most brokers do not charge brokerage, there would be other charges applicable which may include exchange turnover charges, etc and the same could be checked with your respective broker.

LIQUIDCASE has a strong use case for investors who want to manage liquidity in their demat account without having to withdraw and deposit money back from the bank.

As it trades in the same segment as stocks, your trades can be netted out with LIQUIDCASE. For e.g. if you sell any stock, you can immediately buy LIQUIDCASE and your trade gets netted out on the exchange and vice versa while buying any stock. Therefore, it can be used effectively for parking & managing extra cash.

As and when approved by the exchanges, LIQUIDCASE can also be placed as margin to take exposure in the markets.

LIQUIDCASE invests in relatively Low Risk Instruments that offer one-day maturity. While there is no minimum prescribed holding period, it is akin to cash in your demat account and should be used as a cash management tool

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Hi Vishal, only 80% of the proceeds can be used for that or the full 100%?

Thank you sir. It seems that just 1 or 1.5 days of average appreciation should cover the stamp duty + turnover charges. So, it should be good to park if the holding period is at least a few days.

80% would be allowed for subsequent trades on the day of sale (T day). Subsequent day, 100% will be allowed. The 80% is an exchange mandate and this is for all instruments including LIQUIDCASE.

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In Kite fundamental section the expense Charge of this etf is not showing. Please update the expense charges info about liquidcase in Kite. I really like the etf.

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Hi @Rekha_Debnath

You can check the details about the ETF like expense ratio and tracking error in the fundamentals section

Click on LIQUIDCASE —> Go to Apps → Fundamentals

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HELLO,
can we pledge Zerodha Liquid ETF (LIQUIDCASE)?

Hello Hiren,

Yes, you can pledge LIQUIDCASE once the Clearing Corporation approves it. You can refer to this article on when the LIQUIDCASE will be available for pledging.

Good Morning Sir…
Is available collateral against LIQUIDCASE is considered as CASH COLLATERAL or EQUITY COLLATERAL?

Thanks.

Good morning @Rohi51

It will be considered as cash equivalent collateral.