HDFC Mutual Fund announced the launch of the HDFC Nifty 1D Rate Liquid ETF, an open-ended exchange-traded fund (ETF) replicating/tracking the NIFTY 1D Rate Index. The fund is of a relatively low-interest rate risk and relatively low credit risk nature.
The scheme opened for public subscription on August 18, 2023, and will close on August 23, 2023. The scheme re-opens for continuous sale and repurchase within five business days of allotment of units under the new fund offer (NFO).
What kind of mutual fund scheme is this?
This is an open-ended ETF replicating/tracking the NIFTY 1D Rate Index. This product is suitable for investors seeking:
- Current income with a high degree of liquidity.
- Investment in TREPS covered by the NIFTY 1D Rate Index.
What is the main objective of investing in this fund?
The investment objective of the scheme is to invest in tri-party repos in Government Securities or Treasury Bills (TREPS). The scheme aims to provide investment returns that, before expenses, correspond to the returns of the NIFTY 1D Rate Index, subject to tracking errors. There is no assurance that the investment objective of the scheme will be realized.
How may one invest in this scheme?
Investors can invest under the scheme with a minimum investment of ₹5000 per plan/option and in multiples of Re 1. There is no upper limit for investment.
Under normal circumstances, the asset allocation of the scheme will be as follows:
| Instruments | Indicative allocations (% of total assets) | Risk Profile | |
Minimum | Minimum | ||
Tri-Party Repos in Government Securities or Treasury Bills (TREPS) | 95% | 100% | Low |
Units of Overnight/Liquid schemes, Money Market Instruments (with a maturity not exceeding 91 days), cash & cash equivalents. | 0% | 5% | Low to Medium |
Are there similar mutual funds in the market?
To date, only Mirae Asset Mutual Fund launched the Mirae Asset Nifty 1D Rate Liquid ETF on July 24, 2023.
How will the scheme benchmark its performance?
The performance of the scheme will be benchmarked to the performance of the Nifty 1D Rate Total Returns Index (TRI).
The NIFTY 1D Rate Index measures the return generated by market participants lending in the overnight market. The index uses the overnight rate provided through the Triparty Repo Dealing System for the computation of index values. Thus, the aforesaid benchmark is most suited for comparing the performance of the scheme. The Trustee reserves the right to change the benchmark for the performance of any of the plans under the scheme in conformity with the investment objectives and appropriateness of the benchmark subject to SEBI (MF) Regulations, and other prevailing guidelines, if any by suitable notification to the investors to this effect.
Are there any entry or exit loads to this scheme?
This scheme involves no “Entry Load”, which means that investors do not have to pay anything to park their earnings in this scheme. The “Exit Load” would also be “Nil”.
Who will manage this scheme?
Vikash Agarwal is the designated fund manager of this scheme.
Does the fund contain any inherent risk?
The scheme involves “Low Risk” as per the details mentioned in the Scheme Information Document and is best suited to investors willing to understand that their principal will be subject to low risk only. However, investors should consult their financial advisors if they doubt whether the product is suitable for them.
