ETFs have been in discussion among investors for quite some time now. They are considered a suitable investment alternative as they offer a great deal of diversification, liquidity, and even cost-effectiveness.
There are different types of ETFs such as Bank ETF, Nifty 50 ETF, etc. Among them, we have the Nifty 1D Rate Liquid ETF which stands out for its unique features and advantages.
In this article, you will learn more about it and also, the reasons why you should consider investing in this ETF!
What is the Nifty 1D Rate Liquid ETF?
It is an open-ended exchange-traded fund that generally aims to provide returns with a low level of risk and high liquidity by tracking the Nifty 1D Rate Index.
This ETF usually invests in Tri-party repo on government securities or T-bills/Repo or reverse repo.
What are the key features of Nifty 1D Rate Liquid ETF?
The next question is – why even bother to consider investing in this ETF when there are other options available?
Well, here are some key features that can change your view –
- Low risk – It generally has a low interest rate and credit risk. This tends to make it a potentially stable investment option.
- High liquidity – The units of an ETF can be easily traded on stock exchanges. This allows investors to enter and exit positions as per their will.
- Daily IDCW reinvestment – The scheme usually declares income distribution cum capital withdrawal on a daily basis. IDCW tends to be reinvested and paid out monthly.
- No entry or exit load– There are generally no charges for entering or exiting the ETF. This makes it a cost-effective option for investors.
- Low minimum investment – Investors can generally start investing with as little as Rs.5,000 during the NFO period. This is a huge advantage as it makes the ETF accessible to a large group of investors.
- Diversification – ETFs usually invest in multiple government securities and money market instruments. This helps to spread risk and optimize returns.
Who should consider investing in Nifty 1D Rate Liquid ETF?
Now, you must be wondering if this ETF is the right one for you. Well, you can decide for yourself.
If you are among the following mentioned categories of investors, you can consider the idea:
- Conservative investors– It can be suitable for those with seek capital appreciation, without taking a high level of risk and earning a modest return alongside.
- Short-term investors– They can leverage high liquidity and low-risk features of the ETF to earn good returns.
- Retail investors– Investors can invest in this ETF even with a small amount. Hence, you can park your funds herein.
- Daily IDCW reinvestment seekers– Investors who prefer daily income distribution cum capital withdrawal with monthly payouts can benefit from this ETF.
Conclusion
The Nifty 1D Rate Liquid ETF can be a good investment option for investors who want low-risk, high-liquidity investments. It has features like low minimum investment, no entry or exit loads, and daily IDCW reinvestment which makes it suitable for various categories of investors. These categories include conservative, short-term, institutional, and retail investors.
Nifty 1D Rate Liquid ETFs seem to stand out as a suitable investment alternative for those seeking to achieve their investment objectives while keeping up with their risk tolerance level.
You can further learn more about other ETFs such as Nifty 50 ETF to build your investment knowledge and diversify your portfolio!
Disclaimer: Mutual Fund investments are subject to market risks. Read all scheme-related documents carefully.
