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Liquid funds, which for long targeted only corporates, have returned 6% in 2023 — the highest in the last eight years. Now, retail investors have figured out that liquid funds/ETFs are among the best tools for diversification as they provide ease of entry and exit, along with the potential for higher returns compared to traditional savings instruments.
The ETF replicates the Nifty 1D Rate Index, which measures the returns generated by market participants lending in the overnight market
"Liquid ETFs have been designed with an aim of offering investors a highly liquid and cost-effective investment instrument. The diversified portfolio consists of short-term, low-risk debt securities, such as treasury bills, certificates of deposit, commercial papers, and collateralised lending and borrowing obligations with residual maturities ranging up to a maximum of 91 days. The units of this ETF are traded on stock exchanges just like individual stocks," says Chintan Haria, Head - Investment Strategy, ICICI Prudential AMC