DSP Mutual Fund Introduces New S&P BSE Liquid Rate ETF Offering Stable Returns; Buy Or Not?

DSP Mutual Fund has announced its latest investment opportunity, the DSP S&P BSE Liquid Rate ETF (DSP BLR ETF), which commenced its new fund offer (NFO) on Friday, March 15. This open-ended scheme aims to replicate the performance of the S&P BSE Liquid Rate Index, catering to investors seeking stable returns in low-risk instruments.

The NFO for the DSP BLR ETF will remain open for subscription until March 20, 2024.

The investment strategy of the DSP BLR ETF prioritizes safety, with a minimum of 95% and up to 100% of the scheme’s funds being allocated to low-risk instruments such as tri-party repos, repo in government securities, reverse repos, and other overnight instruments approved by the Reserve Bank of India (RBI) and Securities Exchange Board of India (SEBI). The scheme primarily focuses on investing in overnight instruments with a 1-day maturity period.

The DSP S&P BSE Liquid Rate Index is renowned for its stable and relatively low-volatility return profile, mainly due to its investments in low-risk securities within overnight markets. One notable advantage of the DSP BLR ETF is its potential utility as a cash equivalent margin for trading, subject to approval from both the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).

According to DSP Mutual Fund, the DSP BLR ETF is particularly suitable for investors with funds idling in margin accounts, which typically yield minimal returns. By investing in units of the DSP BLR ETF, investors can potentially earn additional returns while ensuring their capital remains actively utilized.

While the DSP BLR ETF offers a promising investment opportunity with its conservative approach and potential for stable returns, investors are urged to exercise caution and conduct thorough due diligence before committing their funds. Like any investment, there are inherent risks involved, and past performance may not necessarily predict future results. It is essential for investors to carefully assess their risk tolerance and investment objectives before making any financial decisions.