Liquid BeES is an exchange-traded fund. It is issued and administered by Nippon Indian Mutual Fund. It invests in the overnight money market, short-term securities and a basket of call money. The best fund management company in India helps you invest in a portfolio that consists of 95%-100% of Repo and Reverse Repo/ Collateralised Lending and Borrowing Obligation (CLBO). The main aim is to lower the price risk and increase returns while providing a high level of liquidity. The returns are usually positive yielding between 4% to 10% annually depending on money demand.
There are no hassles and transaction costs in this investment unlike in transacting money to and fro from trading and bank account. It maintains excellent security and is monitored by the RBI to make sure there are no repayment challenges.

Liquid BeES: How Does it Work?

You can buy a liquid BeES ETF and sell it like a stock. Purchase it at ₹1000 per share and avoid placing a market order. These will be further bought by market makers within an hour. The ETF will come to your account on the second day. Liquid BeES offers a dividend on the interest it receives so that the NAV falls back to ₹1000 so they 0.1% as interest from the money market. Now the NAV increases from ₹1000 to ₹1001. This ₹1 is paid out as a dividend to bring back the NAV. A Dividend Distribution tax applies on the pay out so they will pay ₹0.3 (30%) to the government and you receive ₹0.7 as a dividend which is reinvested as units.

ETFs are mutual funds that let you have fractional units. But while on the exchange, you can sell full units. So, make sure you wait until the additional units grow to 1 unit or more. The risks are quite low since they invest in overnight investments. The Liquid BeES returns are credited to your DEMAT account once in 30 days. You can simply log in to your trading account, search for the term ‘Liquid’ and pick Liquid BeES for yourself. It is the most convenient avenue to park extra money, pledge them at any time and trade immediately.

Liquid BeES for Trading Margins
Pledging Liquid BeES holdings can give you 90% of the value as margins. This is known as a 10% haircut and is treated as cash. Now you do not need any more cash in your account to be placed as a margin. Before considering liquid BeES ETF, look out for:

1. Liquid BeES is a better option than idle cash and will earn interest on weekends as well. But a real liquid mutual fund is a better option if you need it for a short while.
2. Liquid BeES, once pledged, can take a day to unpledge.
3. Some amount of cost is involved in buying and selling it.

Liquid BeES saves time and hassle involved in trading and savings accounts transfers. It helps the equity investor to make a fresh investment, whenever it rises, as it is highly liquid. If you are looking to put your cash in money market instruments or have excess funds that may be needed in future, this could be a useful scheme.