Upcoming NFO: UTI Mutual Fund Files Draft for Nifty 1D Rate Liquid ETF with SEBI

UTI Mutual Fund has filed a draft Scheme Information Document (SID) for the UTI Nifty 1D Rate Liquid ETF - Growth. The proposed scheme is an open-ended exchange traded fund that will track the Nifty 1D Rate Index.  

The product is categorised as having relatively low interest rate risk and low credit risk. It is designed as a passive fund, with returns expected to broadly align with the benchmark, subject to expenses and tracking differences.  

Investment Approach and Allocation 

The scheme will invest between 95% and 100% of its assets in securities forming part of the Nifty 1D Rate Index. Up to 5% may be held in cash equivalents, money market instruments or overnight funds for liquidity purposes.  

Eligible instruments include treasury bills, government securities, commercial paper, and certificates of deposit with short residual maturity. The scheme does not propose to invest in derivatives, securitised debt, foreign securities or complex structured products.  

The portfolio duration is expected to closely match the index, with a permissible deviation of up to 10%. Rebalancing, including changes arising from index reviews, is to be completed within 7 days.  

Subscription and Trading Details 

During the New Fund Offer (NFO), the minimum application amount is ₹5,000. Units will carry a face value of ₹1,000 and will be issued at a price linked to the allotment value.  

After listing, units can be bought or sold on stock exchanges in multiples of 1 unit. Creation and redemption units have been set at 2,500 units.  

Direct transactions with the fund are permitted for investments above ₹25 crore.  

The scheme does not levy entry or exit load. Net asset value will be disclosed on a daily basis.  

Costs and Risk Factors 

The total expense ratio is capped at 1.00% of daily net assets. Tracking difference is expected to remain within 1.25% on an annualised basis.  

Key risks include interest rate movements, liquidity conditions in short-term debt markets and tracking error arising from expenses or portfolio adjustments. The scheme does not offer any return guarantee.  

Read More: Mutual Fund Industry Adds 7.64 Lakh Unique Investors in February, Total Crosses 6.09 Crore! 

Conclusion 

The draft outlines a passive ETF structure focused on short-term debt instruments, with defined allocation limits, cost structure and disclosure requirements. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.   
 
Mutual Fund Investments are subject to market risks, read all the related documents carefully before investing.