What is Liquidbees? All you want to know about it.

Team Paul Asset | March 12, 2016| 69 Comments

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.

GS Liquidbees (Presently Name Changed to Reliance Liquidbees) –

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.

How to buy ( and sell ) liquidbees?

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)

Returns from 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.

Why and when is it beneficial to equity 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:

    • saves time and hassles involved in transferring the money to and from trading and savings a/c
    • helps equity investor to take advantage of fresh investment opportunity (whenever it will arise) immediately as liquidbees is highly liquid.
  • yield better return than bank savings a/c. (Return is also tax-free)

Thus, it can be concluded that liquidbees ETF scheme can be useful for investors looking for:

  • current income  with high degree of liquidity and low-risk
  • investment in money market and debt instruments.
  • have excess funds for a  short period which can be needed anytime in future.

Our offering –

If you are looking for high quality fundamentally strong stocks for long term investment then you are at right place. Click here to get the details of our offering. Along with stock ideas, we have an exclusive feature titled “Recession-Proof Portfolio” that helps investors to protect capital by tweaking asset allocation during the various market stage.

69 Replies to “What is Liquidbees? All you want to know about it.”

  1. Hope same demat ac can be used for buying and selling liquidbee? What is the typical transaction time once I sell the liquidbee.

    1. Yes,the same demat account can be used. It is similar to purchase a stock. Once you sell liquidbees, the fund can be utilized instantly to purchase other stocks.

  2. Now, one question from my side, my broker allows only BSE transactions. Is it same rule applicable as NSE on Liquidbees for BSE transactions? Also i want to know what will be brokarage amount to invest in Liquidbees from BSE?

    1. Liquidbees are traded in BSE too. However, the average daily volume is lower in BSE (compared to NSE)

    1. There is no STT applicable on liquidbees transaction. Few brokers also waived off brokerage charges. Only SEBI charge, stamp duty and service tax applicable.

    1. There is a fractional transaction cost that depends upon your broker. Many brokers don’t charge brokerage on liquidbees. There is no Security Transaction Tax (STT) applicable on liquidbees.

  3. Where can I get more info about it?

    Say I buy 100 shares on 1st March and sell all of them on 31st March.
    i.e. on 1st April I have zero units.

    Will my “dividend” units accumulated for 30 days be allocated?
    Or will I lose them? (could be worth 500-700Rs)

    Also what if just 50 shares are sold?

    I need more information on this front.

    1. Dividend is allocated on daily basis.Even if you hold it for any 3-5 days, then also you are entitled to receive dividend in term of fractional unit.

  4. Dear Prasenjit,
    Thanx for this valuable information. There is a question arises in my mind……..whether selling amount of liquidbees counts as the turnover ? If yes, then 10 times of selling the same count as Rs. 25,00,000 as turnover. Plz clear the matter.

    Thanx & regards
    Dilip Kumar Basak

      1. I read somewhere that for income tax calculations – turnover is not the amount sold or bought.

        Turnover in case of income tax is profit / loss made. i.e. if u buy 10000 worth share and sell for 11000 then turnover is just 1000Rs not 21000Rs.

        1. No, Liquidbees does not come under the purview of turnover. Liquidbees transactions do not affect the turnover.

  5. What if we hold only for 15 days ? If after 15 days we sell then also will get dividend or only if we hold for minimum 1 month ?

    1. You are entitled to receive dividend on the daily basis. So, even if you hold for 2-3 days, then also dividend will credit in form of fractional units.

      1. I have a follow up question to above. In the article you mentioned it only gets disbursed once a month. So, in case if I am holding only for only 15 days, will the dividend get credited to saving accounts. I am sorry, if this seems a stupid question, but I have invested first time on Liquidbees and don’t see any change of status in the total value after 3 days.

  6. Sir,
    i am paying brokerage at high side in my demat a/cs with hdfc & icici. please advise if a demat a/c at Zeerodha is advisable?

      1. I recently moved to zerodha. Good service and zero brokerage on cash delivery. Truly impressed!

  7. Hi, thanks for sharing this valuable info. I have one query. Is there a chance of loosing the capital in any case? I mean zero dividend due to economic conditions?

      1. On Moneycontrol I see 52 wk low is 950.90Rs. Why is that?

        But then if you see historical price for 1 year. Its always 1000.

        So thats kind of confusing by moneycontrol.

  8. ICICI Direct charged 0.64% including brokerage, transaction charges and STT. The charges are same as buying any stock. Buy and Sell would mean 1.28% brokerage costs. Is it really worth it ?

    1. In that case, it is not worth. Many brokerages doesn’t charge for Liquidbees transaction. One can go with them.

  9. dear Paul
    i am IIFL transection fees is very less.
    but i have a question. i checked various websites like economic times and money control
    i foun dexpense ratio of liquid bees is high about .56% and return is 6-7%
    wheres other fund like birla sun life cash plus return is 8-9% and expense ration is .16%

    so should’t we go for fund like that or UTI Liquid fund.

    Please guide regarding that.

    1. You can go for those funds. However, our purpose is to utilize idle amount lying in the trading account and only liquidbees can be purchased from the equity trading account.

  10. Hi Prasenjit,

    Appreciate this thread is a month old but I had some time to read this now. I’ll use ICICI direct as an example trading platform to ask my questions for ease of understanding as this name was used in the above question.

    Are you suggesting that people trading through ICICI direct or similar with high fees (for normal stocks) shouldn’t bother investing in liquid bees at all?

    If this is the case what is your advise for such customers and should they even consider investing in liquidbees through other trading platforms given that people will have to trade on two different trading platforms and manage funds transfer between two accounts etc etc ?

    Finally, can you name few trading platforms through which you would recommend buying and selling liquid bees i.e. those having minimum or no brokerage on liquid bees transactions?

    Thanks in advance..

    1. Keeping idle money in liquidbees won’t be beneficial if you pay more than 1% as the transaction cost. Brokers like zerodha,rksv etc don’t charge any brokerage for delivery based trading in liquidbees as well as any stocks.

      1. Same with FYERS broking too. But one thing I require clarification on – what about fractional units? Can I redeem that or is it possible only after one full unit is accumulated?

        1. You can redeem fractional unit by making direct application to the fund house. Otherwise, you need to wait for becoming it full unit to sell in the market through NSE/BSE.

  11. Prasenjit,
    Which platforms are not charging brokerage on Liquidbees? Can you please give a few names?
    Sharekhan is charging, i bought some & confirmed that.

    Also do you know, in case of Liquid Fund, Is it better to go for Dividend Reinvestment or Growth Option in 30% tax slab?

    Best,
    RB

    1. Brokerage like zerodha,rksv.com etc won’t charge brokerage at all.

      I can’t help you for the second part of your question.

  12. Another reason to stay away from these so-called “full service” brokers like ICICI Direct and HDFC Securities. They are charging more than 1% in round-trip commissions but adding no value. It’s like killing you with a hundred cuts. Stay away from these mosquitoes. Stick with flat-fee discount brokers like Zerodha, et. al.

  13. Hi prasenjit,

    Just want to understand, I assume this 6.41% annual return is post Dividend Distribution Tax?
    Also in case of NRIs does TDS applicable? Savings banks are offering 4% interest for NRIs excluding taxes…can you suggest which option is better for NRI , Park funds in Savings a/c to earn 4% or park it in Liquid Bees to earn better returns….Basically i need to understand the Post tax returns for the NRIs…also is there a capital gain tax applicable at the time of sell?

    1. If you consider the post-tax return for NRI then liquid bees will score better than the savings account because the former offers 5%-6% annualized tax-free return on the investment.

  14. Hi,
    Thanks for a very good article. On the http://www.nseindia.com , LIQUIDBEES shows 52 week low of 950.9 (on 29-Jan-16) and 52 week high of 1018 (27-Apr-2016) . Can you please through some light on how is this possible if the fund maintains the value at 1000.00 . Does this mean that people who sold on 29-Jan-16 incurred a huge loss .
    Best Regards,
    Sudhir Shetty

    1. That’s not the correct information. On any particular day one can buy and sell Liquidbees at Rs. 1000

  15. what about the dividend that gets converted into fractional units? is it possible to sell the fractional units or do we have to wait for some minimum units

    1. Fractional unit is not possible to sell through stock exchanges like BSE/NSE. Either you have to wait for the full unit or you can sell fractional unit directly to the fund house.

  16. Dear Paul, I hold around 100 units of Liquidbess, I have booked profit in most and sitting with cash for the market to correct, I want to know if for example the market nosedives and crashes by 500 points today and if I sell them during market hours will my trading margin increase immediately to purchase further stocks (to hold -CNC)? Kindly inform, Thank You

    1. Yes, selling liquidbees during the market hours will immediately increase the trading margin so that you can reinvest the same.

  17. Hi Mr Paul,
    My query is, if suppose i invest surplus cash balance on friday closing through NSE & liquidate the same on monday morning, whether i am entitle for dividend?

  18. Whether Rshares Liquid bees and GS liquid bees are same in terms of instrument?
    With symbol LIQUIDBEES only Rshares Liquid bees i am getting not GS

  19. Hi Prasenjit, This article is very useful one. I got a chance to read only today. Thank you. I have a question . Is this a good option for long term purpose to utlize the excess money . I am asking this question as safety aspect of capital . I am fine with the returns since it is tax free .Kindly clarify

    1. We don’t suggest parking capital in Liquidbees for the long term purpose. It is only good to utilize the idle money in the trading account.

  20. Hi Prasenjit,
    I bought and sold a 1 unit of liquidbees through my SBI Smart demat ac. They charged Rs 6.77 as brokerage and taxes etc at the time of purchase and again at the time of sale. So I was left with Rs 14 less. This was definitely not profitable. Is it that SBI charges are too high or have I gotten the whole concept wrong. the purchase price was Rs 1000.01 and sale price was Rs 999.99. Would be grateful if you could clear my confusion as to how this is profitable?

    1. First of all, liquidbees can be purchased and sold at the same Rs. 1000 on any day. The gain is from daily dividend. Follow the above article for details.
      Secondly, if any brokerage charge 6.77 for Rs.1000 transaction then immediately one should change it. The ideal brokerage including all associated levies should be Rs.1-2 for every Rs.1000 transaction.

  21. Hi paul sir
    When I search for liquid bees I see Reliance liquid bees but never found GS liquid bees.
    Will you suggest to invest in Reliance liquid bees?

  22. Does the money from redemption of liquid bees is immediately available for trading? Do different brokerge houses have different rules?

  23. Sir,suppose i am holding liquidbees of say value 10 lakhs and on a particular day,i want to purchase shares for that money,what should i do? what i am asking is that, if i sell those liquidbees on that day itself,will the proceeds be credited to my account to take account of the cost of shares purchased?

  24. Is the 6 to 7 % net return, post the Dividend distribution tax, or effectively it will be 4.2 to 5 % post 30% Div distribution tax? please clarify

  25. Hello sir, thanks for the great article on liquid bees, one question, can I see fractional units in my dp ?

    And second is,

    Which day of the month they credit the dividend units ?

    1. No, fractional units are not reflected in DP. There is no such particular day in the month for extra units credit. However, the fund house sent email statements covering all details.

  26. Sir I invested Rs 50000 for one month. I got 50 units in my demat account and sold them after one month. I didn’t get dividend, fractional units or email

  27. Thanks for the knowledge shared.

    Under what circumstances my money could go zero? Is there any scam possible?

    The reason behind asking you is I am a option writer and i have parked huge sum in liquid bees. But I am always afraid of scams like what happened in DHFL etc..

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.