Edelweiss Nifty 1D Rate Liquid ETF: A New Avenue for Ultra‐Short‐Term Investors

Edelweiss Mutual Fund has launched its latest exchange‐traded fund, the Edelweiss Nifty 1D Rate Liquid ETF – Growth, designed to offer investors returns in line with the Nifty 1D Rate Index with minimal interest‐rate and credit risk. The New Fund Offer (NFO) commenced on September 30, 2025 and closes on October 3, 2025, with the scheme reopening for continuous sale and repurchase by October 10, 2025. Units are being offered at ₹1,000 per unit during the NFO and at applicable NAV afterwards, providing both initial certainty and flexibility thereafter.

The scheme’s objective is to track the performance of the Nifty 1D Rate Index, a one‐day rolling index that reflects prevailing overnight interest rates. To achieve this, the fund will allocate between 95% and 100% of its assets to instruments replicating the Index, while deploying up to 5% in money‐market instruments, cash, cash equivalents, or units of liquid schemes to meet liquidity requirements. Under normal circumstances, treasury bills, tri‐party repo, government securities with maturity up to one year, certificate of deposit, and call or notice money will constitute the portfolio. The fund manager may also park cash in short‐term bank deposits pending deployment, in compliance with SEBI guidelines.

The scheme carries a relatively low risk profile, as indicated by its internal Riskometer rating. Both credit risk and interest‐rate risk have been classified as “Relatively Low,” reflecting the ultra‐short‐term nature of the underlying securities and their high‐quality counterparty credit. While there is no exit load for units sold on the secondary market or redeemed directly in creation unit size, investors should note that brokerage costs on exchange‐traded transactions are borne by them. For direct creations and redemptions with the AMC, units can be created or redeemed in blocks of ₹25 crore worth of assets, ensuring efficient institutional access. Market makers will facilitate liquidity by creating or redeeming in multiples of 500 units, the defined creation unit size for the ETF.

The scheme is managed by two seasoned professionals: Mr. Hetul Raval, with 36 years of experience, and Ms. Pranavi Kulkarni, with 39 years of experience. As a passively managed ETF, it aims to minimise tracking error and expense ratios, although the Total Expense Ratio (TER) will be disclosed once the fund is operational. Transaction charges are waived for distributors in regular plans, and a stamp duty of 0.005% on transaction value applies as per the Finance Act, 2019. Applications through ASBA are accepted, enabling investors to block subscription amounts in their bank accounts until allotment.

The scheme serves investors seeking an ultra‐short‐term liquid option within their portfolios, such as corporate treasuries, mutual fund investors requiring cash parking, or retail participants looking for stable returns with minimal risk. By closely mirroring the overnight rate benchmark, the Edelweiss Nifty 1D Rate Liquid ETF presents a compelling solution for those prioritising capital preservation and liquidity in a volatile rate environment. With its NFO priced attractively at ₹1,000 per unit and the flexibility of exchange‐based trading, this ETF stands poised to become a key tool in the liquidity management toolkit of both institutional and retail investors.

Disclaimer: This article is for informational purposes only and not an offer to buy or sell any securities.