Equity investors need to keep idle money (not earning any interest) in the trading account after booking profit from shares or when there is no viable investment opportunity. They can transfer the fund to savings bank account to earn interest. However, there is hassles and transaction cost involved in transferring the money to and from trading and bank account. Investment in liquidbees eliminates the entire hassle and time. Further, it yields better return than the 4% savings account. Check out the full article to know more about it.
Liquid Exchange Traded Scheme (popularly known as liquidbees) is an open-ended liquid scheme with daily dividend and compulsory reinvestment of dividend option. GS liquidbees is the first Liquid ETF (Exchange Traded Fund) in the world. Recently the name is changed to Reliance Liquidbees, everything else remains same. (Note, there is only one liquidbees in the stock exchange). ETF’s are marketable securities, that tracks an index, commodity, bonds, or a basket of assets. Unlike mutual funds, an ETF trades like a common stock on a stock exchange. ETFs have higher liquidity and lower transaction fees than the mutual fund or shares. GS liquidbees is beneficial to investors looking for current income with relatively lower risk and high level of liquidity. Liquidbees invests in a portfolio of government securities, treasury bills, call money, collateralised lending and borrowing obligation (CBLO)/similar instruments, reverse repos and repos (65% to 100%) and other money market Instruments (0% to 35%). Thus, it provides reasonable return while maintaining safety and liquidity. There is no entry or exit load on liquidbees scheme purchased and sold on NSE or through the fund. The performance of the scheme is benchmarked against CRISIL Liquid Fund Index.
Liquidbees can be either bought directly from the fund or from NSE where it is traded. If you purchase directly from the fund through Mutual Fund Service System (MFSS), then you have to buy in a lot size of minimum 2500 units and in multiples of 1 unit thereof. Thus, your minimum investment has to be Rs 2,50,000(2500units*1000). However if you purchase from the stock exchange (NSE), 1 units and in multiples thereof can be bought. Thus, you can invest through NSE with just Rs1000( 1unit*1000). Similarly, if you want to redeem from fund directly, it can be redeemed in a lot size of 2500 units and in multiples of 0.001 units thereof. From the stock exchange (NSE), you can redeem 0.001 units and in multiples thereof. Liquidbees is settled in the Rolling Segment on the T+2 basis. It can be settled only in electronic (demat) mode.
Thus, the most convenient way to invest in liquidbees is through NSE (stock exchange). As like you purchase equity shares from your trading account, similarly, you can invest in liquidbees from your existing trading+demat account. (NSE symbol LIQUIDBEES or in some brokerage you will find full name Reliance Liquidbees)
You will find that the price of liquidbees (listed under NSE) is always stagnant at Rs 1000 per unit. You may wonder then how is it possible to earn a return when the price is not fluctuating. This is because the returns from the scheme accrue to you not in the form of capital appreciation but as a daily dividend, which has to be compulsorily reinvested in the scheme. The units arising out of dividend reinvestment are credited to you once every month.The fund provides investors with a facility of buying back fractional units credited due to the dividend payment. Liquidbees is designed in such a way that the fund will seek to maintain the NAV at a fixed value by distributing income from it as it arises. The scheme in the last 5 yrs has given an annualised return of 7.15%, whereas in last 1 yr the fund has generated the return of 6.41%. Return is not taxable as it is in the form of dividends which are not subject to tax in the hands of the investor.
Liquidbees is especially beneficial for equity investor when the money is lying idle in their trading a/c and is not earning any interest (return.) This may happen when are no viable investment option or after booking profit from sales of stocks. In such cases, investors generally transfer money to their savings bank a/c to earn interest until fresh investment opportunity arises. In situations of idle cash in trading a/c an equity investor benefits from investing in the liquidbees scheme as it:
Thus, it can be concluded that liquidbees ETF scheme can be useful for investors looking for:
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