Why don’t we have a Growth-based equivalent of Liquidbees ETF?
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Growth-based instead of dividend-based since dividends attract tax post Budget 2020. The fractional units received as dividends don’t grow further (only a whole unit gives dividend). The fractional units remain unused in your account which is technically a rupee loss, while the AMC is enjoying it being parked with them.
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Growth-based because fractional units of Liquidbees can’t be sold on the secondary market and one has to go via DIS route which is cumbersome, involves paperwork, and comes with a time cost and money cost. I am already struggling on this part personally. The fractional units are lying stagnant in my account which I need to get rid of but the process is so hectic.
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Currently TER of Liquidbees ETF is about 0.65% which is way too high compared to Liquid Mutual Funds which have a TER of 0.05 - 0.15 range. Compare it with the ‘peanuts’ returns it gives which is even worse than bank savings account interest rate.
I would request Zerodha AMC, whenever it comes to existence, to seriously consider the above-said pointers and rescue us with a growth-based alternate to Liquidbees ETF that is low on cost and is better in yield than the current dividend-option. This would also let go of the issue with selling the fractional units.
Another on my wishlist for Zerodha AMC is a Nifty 50 index-based ELSS fund which I had mentioned earlier.
Zerodha AMC can launch with two low-cost ETFs/ MF -
- Growth-based Liquidbees alternate
- Nifty 50 based ELSS
Both would help Zerodha AMC to increase AUM. A win-win for both investors and the AMC.
What do you think?