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Liquid ETFs: An Effective Strategy for Traders

Traders often face the challenge of maintaining the right amount of money in their brokerage accounts. While saving bank accounts offer some interest, it is unattractive. To address this issue, savvy traders park their funds into liquid Exchange Traded Funds (ETFs).

What are Liquid ETFs?

Liquid ETFs invest in debt instruments that mature overnight. They offer attractive returns and provide the liquidity to trade seamlessly. Gains are either paid as dividends or credited as fractional units.

Advantages of Liquid ETFs

  • No credit risk: They invest in tri-party repo on government securities and treasury bills.
  • Attractive returns: They provide returns in line with money market interest rates.
  • No duration risk: Money is redeployed daily.
  • Saves time and costs: No need to transfer money from bank to brokerage account.

How to Invest in Liquid ETFs

Liquid ETFs can be bought and sold like any other stock on a stock exchange. Most brokers offer margin as high as 90% on these units.


Investing in liquid ETFs can be very attractive for traders planning for a short break. They save time, costs, and provide peace of mind.


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