So ETF’s are not popular in India. However that shouldn’t stop us from buying and holding ETF for investment purposes. I am trying to get a through understanding of what do we do incase if we do go down the route of buying an ETF which is quite illiquid.
I am trying to understand the complete process & solution on what to do incase if we have ETF and there illiquidity and we cant sell it in exchange and need to redeem it directly with AMC and what’s the process involved.
So based on the news I collected:-
So it’s written:-
Sebi said that “Investors can directly approach the AMC for the redemption of units of ETFs for transactions of up to Rs 25 crore without any exit load.”
The redemption of up to Rs 25 crore transaction without exit load has three scenarios wherein it can be used.
● Traded price (closing price) of the ETF units is at a discount of more than 1 per cent to the day-end NAV for 7 continuous trading days, OR
● No quotes for such ETFs are available on stock exchanges for 3 consecutive trading days, or
● Total bid size on the exchange is less than half of the creation units size daily, averaged over a period of 7 consecutive trading days.
As checked AMC says the same
Also, I found someone in this forum was able to sell off his ETF units(fractional units) directly to AMC offline
Continuing the discussion from Step by step guide to redeem fractional units of Liquidbees (Zero paperwork):
@Bhuvan :- So based on this , My question is if we buy any one of those illiquid ETF in kite i.e MON100 ETF, DSP liquid ETF etc, & based on SEBI’s conditions, do we have to sell the ETF units back directly to AMC as mentioned by the guy in this forum to exit? Can you share the complete process of this( I didn’t understand what’s a BOID and where to get it? )Do we need DIS booklet to sell ETF units offline to AMC ? Will Zerodha provide end to end support in selling illiquid ETF to AMC for redemption ?
It might be useful for us, illiquidity won’t be a bottleneck for ETF’s if exit process is clear.
Note:- I just want to know the complete end to end process of selling ETF to AMC . Paper work does not matter!