Zerodha Fund House (ZFH) has launched India’s first Growth Liquid exchange-traded fund (ETF), the Zerodha Nifty 1D Rate Liquid ETF. The new fund offer (NFO) is set for listing on both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) by 24 January 2024 

Zerodha’s Liquid ETF has been developed to mirror the Nifty 1D Rate Index, which tracks the returns generated from overnight market lending by market participants. The index uses the overnight rate provided through the Tri-Party Repo Dealing System (TREPS) for the computation of index values.

The fund is managed by Apurv Parikh and strategically invests in Treasury Bills Repurchase (TREPS) on the Clearing Corporation of India Ltd (CCIL) platform. The fund house said that as the investment is made in short-term debt products backed by treasury bills, it carries a relatively low credit risk and interest rate risk.

CEO Vishal Jain highlighted that since this new ETF offers a Growth NAV, it is easier to track the ETF’s performance. Additionally, the returns are taxed only when the ETF is sold, as compared to daily dividend-taxed alternatives.

Investment in ZFH’s new product starts with a minimum application amount of Rs 500 and in multiples of Rs 100 thereafter. The estimated total expense ratio (TER) can go up to 1.00% per annum.