DSP Mutual Fund on Friday (March 15) announced the launch of DSP S&P BSE Liquid Rate ETF (DSP BLR ETF), an open-ended scheme replicating/tracking S&P BSE Liquid Rate Index. The new fund offer (NFO) for DSP BLR ETF will be available for subscription till March 20, 2024.
Investment strategy
A minimum of 95% and up to 100% of the scheme shall be invested in low-risk instruments like tri-party repos, repo in government securities, reverse repos and any other similar overnight instruments as may be provided by Reserve Bank of India (RBI) and approved by Securities Exchange Board of India (SEBI).
The scheme will invest in overnight instruments with 1D maturity.
Key features
The DSP S&P BSE Liquid Rate Index is known for its stable and relatively low-volatility return profile, attributed to its investments in low-risk securities within overnight markets, DSP Mutual Fund said.
An additional advantage of the DSP BLR ETF is its potential utility as a cash equivalent margin for trading, subject to approval from the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).
Anil Ghelani, CFA, Head of Passive Investments & Products at DSP Mutual Fund, emphasised the versatility of the DSP BLR ETF.
He noted, "DSP S&P BSE Liquid Rate ETF is designed to always let investors’ money remain in action and hence makes it a useful product for brokers with large retail clients, PMS providers, F&O brokers, institutions who invest in direct equities HNIs and retail investors who trade on the stock exchange."
Suitability
As per the fund house, the scheme is particularly suited for investors who have funds idling in margin accounts, which typically yield no returns.
By parking their capital in units of the DSP BLR ETF, investors may potentially earn additional returns while ensuring their money remains actively utilised.
Conclusion
While the DSP BLR ETF presents a decent investment opportunity with its conservative approach and potential for stable returns, investors should exercise caution and conduct thorough due diligence before investing.
As with any investment, there are inherent risks, and past performance is not indicative of future results.
Investors should assess their risk tolerance and investment objectives carefully before making any decisions.
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