Everything you need to know about Liquid Exchange Traded Funds (ETFs)

General
66

Haircut for pledging Liquid Bees and ICICILQ is 10%.

Haircut value is already deducted when you pledge the stock, you don’t have to pay any haircut again.

We will allow pledging of DSP Liquid ETF soon.

67

What is the 8% haircut mentioned in the snapshot ? Can you please explain ? @ShubhS9 @siva

68

Updated Link to Liquid Bees Buyback PDF: https://investeasy.nipponindiamf.com/rmfGsamnew/documents/FacilityforbuyingbackfractionalUnitsofLiquidBeES_new.pdf

@Bhuvan Please update the same in post.

2 Likes
69

Thank you for pointing out, updated the link :+1::+1:

70

Extremely useful. Thanks for the detailed explanation. I have a question, not related to this. Can NRI open 2 Demat accounts?

71

When u buy liquid bees, the gain comes in forms of dividend and number of unit increases.
Example
Buy 100 qty price 1000 cost 1 lakh
After some time /1month time u will see qty raised to 100.05

72

Is this true for ICICILIQ also?

73

Yes, the ICICILQ is the same as LiquidBees and Liquid ETF.

74

Under the New Margin rules can i buy stocks from the proceeds of selling Liquidbees on that day (T+0) itself?
I think previously it is possible…

1 Like
75

This is possible now as well.

1 Like
76

If I buy DSP liquid ETF, will I have to pledge it every time I want to trade, and pay charges for it? or is it one time pledge and then forget about it till the time you sell ETFs?

77

Pledge process is one time, you don’t have to repeat it again and again.

1 Like
78

I have gone through the whole post, and understood that it is safe investment if you have cash lying idle in your account. But does ETFs have anything to do with markets ? I am willing to lose money on my trades, but will I have to worry about ETFs as well?

79

There is risk in every Investment, as for Liquid ETF’s, they invest in low risk instruments, as mentioned above.

What securities do Liquid ETFs invest in and are they safe?
Liquid ETFs invest in Tri-Party REPO, Repo, Government Securities, Reverse Repos, and other similar overnight instruments. Liquid ETFs have so far stuck to overnight lending which as risk-free as it can be. About 99% of their allocation is towards tri-part repo which is fully collateralized. Meaning, assume that some borrows from an AMC defaults, since the money is fully collateralized, there is no default risk.

Also, since they only hold overnight securities, the interest rate risk also as good as zero.

1 Like
81

Hello, When does the dividend start on liquidbees, from the day of the transaction or from the day that they units are credited in my DP account?

Esp say if I buy liquidbees on Friday and sell on Monday, will I get any dividend or not due to the T+2 days?

82

I think liquidbees have to be credited into your Demat before you can start earning daily dividends. So it must T+2. @siva , is this correct?

84

Buyer only will own dividend, but it will come to broker and broker in turn will pass to client as shares are not in client demat account.

85

So , after buying the liquidbees, the buyer has to ask the dividend for T+2 days from his broker .
Correct ?

86

@siva , the question when does the investor start earning dividends from liquidbees purchase. Would it be immediately from the date of purchase or after T+2 days?

he wants to know if liquidbees purchased on Friday and sold on following monday earn any dividends? Since the liquidbees has not yet been credited to demat.

87

If one buys on friday and sells on monday- he won’t get interest as shares never reached his demat.

My bad, above my explanation is general like what will happen if one sell shares on ex dividend day.