Anugrah Srivastava, founder of smallcase, on Tuesday announced that Zerodha AMC's LIQUIDCASE has hit Rs 150-crore assets under management in just seven trading sessions. He also explained how LIQUIDCASE is different from other liquid ETFs. - NAVPrice of these ETFs don’t change. It remains fixed at a value like 1,000. - Given price remains the same, users earn returns in the form of more units or cash. - Let’s say, the price of the ETF is 1,000 and you have purchased 100 units of this ETF. After some time you will have more than 100 units (something like 100.5) but the price of the ETF will remain the same. Thus, you get the returns in the form of additional units but the price of the ETF remains the same. The additional units that you have earned as dividends get credited to your demat account every monthfortnight. - There are some liquid ETFs that provide returns in the form of cash and not units. Let's take the same example, where you purchased 100 units and the price of the ETF was 1,000. In this case also, the price will remain constant at 1,000 and the number of units in your demat account will also remain the same at 100, but you will receive cash dividends in the bank account linked with your demat account. How LIQUIDCASE works - NAV changes daily. It started from 100, but is changing daily to reflect the scheme's performance. Over a period of time, NAV should move to 105-110 and so on. - If we take the same example where you purchased 100 units and let’s say the price on the day of the purchase was 100. In this case, the number of units in your account will remain constant at 100 but the price of the scheme will change to 101-102 as the time progresses. Thus, it works like a usual mutual fundETF where units remain constant and price changes to reflect the performance of the fund. Liquid ETFs are great to park idle cash, as they generally offer better returns than the most savings bank account, said Srivastava. He listed out the benefits of LIQUIDCASE versus other Liquid ETFs. - Easy P&L tracking: With LIQUIDCASE investors would be able to track P&L by just comparing the entryexit price. This is not possible with other liquid ETFs where returns are provided in the form of cash or units. - Readable performance chart: Price charts of all other liquid ETFs show a straight line with no movement, as the value remains constant at 1000. But the LIQUIDCASE chart will show the actual growthperformance of the fund. Thus, Investors can easily read and understand the performance chart of LIQUIDCASE vs other ETFs. - No fractional units: Users end up with fractional units in the case of liquid ETFs where returns are provided by issuing additional units. These units can’t be sold directly on the exchange and are difficult to redeem. - More tax efficient: In LIQUIDCASE you will be taxed only when you sell the units. In case of other Liquid ETFs, you will be taxed every year as you would be constantly receiving dividends throughout the year.
