In the conventional daily dividend model, income earned by the fund is distributed either as cash or additional units, while the net asset value (NAV) remains static.
According to Angel One, this structure can make return tracking difficult and results in daily Tax Deducted at Source (TDS), which can reduce overall compounding for retail investors.
The Growth NAV format, by contrast, accumulates the income directly into the NAV. Angel One stated that this model eliminates daily unit accruals and reduces TDS deductions. It added that this change may simplify performance tracking for investors who do not redeem frequently.
Angel One’s Nifty 1D Rate Liquid ETF – Growth, recently listed on the National Stock Exchange (NSE), follows this newer format. The firm said the fund carries a Total Expense Ratio (TER) of 0.27% as of June 30, 2025. In comparison, TERs for existing liquid ETFs range between 0.40% and 0.70%, according to the firm.
The ETF operates with a face value of ₹1,000 and trades with a standard price spread of ₹0.01. Angel One said this could reduce the impact cost per unit traded, particularly for institutional or high-frequency users, when compared to ETFs priced at ₹100 face value.
The company also reported that during a six-day window in June 2025, the ETF delivered annualised returns 80–90 basis points higher than other Growth NAV-based ETFs operating at a ₹100 face value.
Angel One noted that with liquid ETF returns generally in the 5–6% annualised range, even small differences in structure, cost, and tax treatment could influence net returns. It advised that investors consider these factors when evaluating liquid ETF options.
First Published: Jul 3, 2025 1:44 PM IST