returns for liquid etf, liquid funds or overnight funds will be in line with rbi repo rates… as interest rates have fallen returns in these funds have decreased as well.
Agree, returns are horrible for more than a year now. around 2.5%, way below the benchmark. Not sure why though. That coupled with compulsory dividend payout in fractional units makes it a problematic etf to invest in.
I am just waiting for my holding to reach whole number, so i can sell and get out.
yeah mate, I had invested in some units and pledged for margin thinking the returns will at–least pay for the API charges and I can use 90% of the value as margin to trade. For the past few months it doesn’t even make 2.5%. Initially the claim used to be that it will give a return slightly lower but close to SBI’s FD rates but this is nowhere near. I’ve heard that 0.65% is charged to the gross returns but even then this return is too low
That’s understood but 2 rupees per month per Rs.1000 is cruel.
I think you should look for liquid funds or money manager funds they both provide 6-8% returns and can be used as cash equivalent. So, would be a win-win situation.
@Rejeesh_Mathew I was invested in Liquidbees in the past and I exited from it. My experience may help you make a wise decision.
Which ones? And what’s their haircut%
I’m exiting this for sure but haven’t found an alternative yet.
maybe you should check out liquid and overnight funds.
Like Aditya birla money manager fund
Hdfc Money market fund. The haircut is 10% and is considered as cash equivalent. I am also shifting from liquid funds to money market funds for pledging.
Just out of curiosity!
The API access and algo, are they worth it for smaller scale investor (cap <2L)
For redeeming mfs , order should be placed before 2 pm ? if placed before specified time also will funds will be credited in trading account by T+1 day ? LQB can be sold instant and 80% values will be reflected immediately in trading account , im asking for parking in LQB for timebeing with equity trades ( not for fno ) .Thanks.
Hi, Let me put it this way. This a answer is very easily arrived if you do the cost benefit analysis yourself. The cost of having the API is 2000/- per month or 24k for the entire year (in case of Zerodha, and there are some free APIs as well like Alice Blue) The Algo, if you were to code yourselves, there is no additional cost, but if you need to hire a programmer, that would be a onetime cost of anywhere between 10k to 50k.
So, now you know the cost.
When you are operating with a small account say 2L this could add up to 15% to 35% on your capital per year. Now the question is whether you have a system that spins above that percentage of CAGR - that’s for you to answer.
The other consideration is whether your system is so dynamic and requires quick response that is hard to achieve manually.
I hope this helps you!
Everything will work when there is a edge in our system, or at least in our approach.
Thanks for your answer Rajeesh Sir.
Not sure if this is an old comment, but instead of waiting to reach whole number (which still may have some fractional unit leftovers), you may sell it off-market back to AMC.
I had read your post earlier and it is very informative.
It’s just that my amount is really small, so it’s not worth the effort. I’ll wait out for some months and get rid of it
Btw, fractional units don’t yield dividends. Only whole units do. Just saying it because I had learned it along the way. I had sold the whole units leaving behind the fractional units thinking when they turn into whole units, will sell them too. Waited for a couple of months and nothing happened. Little did I know back then that fractional units are leftovers that don’t grow. And when I discovered it, I understood it is better to save time and pay Rs 25 offline transaction fees to get rid of these fractional units lingering in my account.
Yup. That’s why I haven’t sold my whole units yet. They are slowly trickling fractional units. few more months and I’ll be done with it.
For me my fractional units are also yielding dividends.
you can see .0001 is increased. That has happened in both of my account.
That must be a pending dividend payout. It’s credited on monthly basis.