Looking for cash component instrument for FNO trading.
I have short listed my option to long term gilt etf like LTGILTBEES
Is there any advantage of gsec etf ovfer gsec MF?
expense ratio is way lower than gilt funds.
Also what is the best way to buy this etf lumpsum?
I think when interest rates go down - gsec bond prices including etf goes up and vice versa?
so best way to time buying it is …when interest rate is going up?
Also what about indexation benefit on LTCG?
@viswaram @pankushri @Jason_Castelino
Gsec etf may have liquidity issues. Not very sure though as I prefer regular MF here.
You won’t be able to time it perfectly. Everything will be priced in advance. If you see long term bonds always have a slightly lower yield because over a period of time, interest rates will only come down.
The day interest rates are actually changed, the value of bond will change depending on whether it was priced in or not. Market discounts what’s known to all, whether it’s equity or debt.
No indexation on debt funds.
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You can save expense ratio if you directly hold the Gsecs rather than buying an MF that invests in it. Also, Gsecs have the lowest risk. Debt mutual funds have the growth option whereas the Gsecs have interest withdrawals half-yearly (hence its not tax friendly) - that is the only advantage MF has over Gsecs.
Stands removed from 31st March 2023.
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So what is the disadvantages of gilt etf over gilt mf?
I see a clear cut advantage of lower expense ratio …so please advise
Even though gsec etf like ltgiltbees is debt instrument - I see frequent fluctuation in its price ?
and want to confirm …capital gains we receive in this gilt etf will be increased value of the unit correct? I mean they wont pay every month or quarterly like liquidees correct?
So both LTGC and indexation gone now correct?
also my question was gilt etf like ltgiltbeeds vs gilt mf ?
why would you prefer gilt mf when expense ratio is like 5 times that of gilt etf expense ratio
I will never choose GILT unless I have a 10+ year horizon, even then I would weigh the Gsecs higher. You never know what all AMCs will remain after 10 or 15 years.
Ok but what should be preferred between gilt etf vs gilt mf and why ?
Liquidity risk. Also I have no patience to check its iNav and then place trade. I may lose some in the form of bid ask spread. If you are going for buy and forget types then may be etf will be better.
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