Who can invest in liquid ETFs?
Liquid ETFs are mutual fund schemes traded on exchanges, just like shares. They carry low risks and are highly liquid. Default and interest rate risks are almost nil in liquid ETFs, as they invest mainly in repo instruments maturing overnight. Idle funds in your trading account can be parked in liquid ETFs to generate some extra returns. You can pledge them anytime and make a trade immediately. So, when you wait for a trade and have funds parked in a Liquid ETF, what you can do is pledge them back with your broker and use the margin to take a trade. You don't even have to sell them and this makes them an extremely convenient tool for cash management.