Zerodha Fund House CEO On Benefits Of Growth Liquid ETF

Zerodha Fund House's growth liquid ETF will make it easier to track performance and returns will be taxed only when the ETF is sold, according to Vishal Jain, chief executive officer of Zerodha Fund House.

The fund house on Wednesday listed India’s first growth liquid ETF—the Zerodha Nifty 1D Rate Liquid ETF—on the NSE. It replicates the Nifty 1D Rate Index, which measures the returns generated by market participants lending in the overnight market. The ETF primarily invests in Treasury Bills Repurchase, traded on the Clearing Corp. platform.

"This new product marks the arrival of liquid ETFs that offer a growth NAV (net asset value) for the first time in India. This feature makes it easier to track the ETF's performance. Additionally, the returns are taxed only when the ETF is sold, as compared to daily dividend which is taxed continuously," he told NDTV Profit on Wednesday.

The rising interest and investments of mutual funds in India has led to many players foraying into the space. Reliance's Jio Financial Services Ltd., Bajaj Finserv Ltd. and Groww are among the ones who have received the AMC licence from the Securities and Exchange Board of India. 

More players in the industry will boost penetration, he said. "There is still a lot more work that needs to be done in terms of penetration of mutual fund products in a large population like ours. We believe that more and more players really help penetration get better," Jain said. "Our objective is to launch simple products, which will help the penetration happen faster."

The AMC got its mutual fund licence in August last year and has so far launched three funds, including the newly listed ETF. The other two funds are the Nifty Large Midcap 250 index fund and the ELSS Tax Saver Nifty Large Midcap 250 index fund.

"We have had an overwhelming response on the previous two new fund offers with our assets under management crossing about Rs 250 crore from the two products in a short span of three months... The journey has just begun for us and there is a lot more coming from us in the coming few weeks," he said.