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In common terms, Best Liquid Funds are Debt Mutual Funds or rather money market Mutual Funds with the only difference being in the investment duration. Liquid Funds invest in very short money Market instruments like the Certificate of Deposit, treasury bills, commercial papers etc.
The investment duration of these funds is very short, generally ranging from a couple of days to a few weeks (it can even be one day!). The average residual maturity of liquid funds is less than 91 days as they invest in securities which individually have a maturity upto 91 days. Being a short-term Debt fund, these funds are highly suitable for investors looking for low-risk investments for short duration.
The low maturity period of best liquid funds helps fund managers to fulfil the Redemption demand of investors easily. In the market, there are various liquid fund investments available.
Investing in liquid funds are any day a better option on investment as compared to putting money in popular saving Bank account schemes.
Owing to its familiarity and institutionalized nature of saving bank accounts, an average Indian taxpayer has more trust in them. However, it seems they are not the most popular short-term investment anymore. This is due to the rising acceptance of mutual funds by investors with different investment goals. Your hard earned money that lies in a savings bank account fetches you only 3.5% interest per annum. However, the best liquid funds have returned as high as 6.5-7.5% on an average in the past 1 year period, on an annualized Basis.
So, on returns alone, liquid funds score over a savings bank account. If you have a raise or a bonus coming your way, invest in liquid funds and party later.
Talk to our investment specialist
Fund NAV Net Assets (Cr) 1 MO (%) 3 MO (%) 6 MO (%) 1 YR (%) 2023 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Axis Liquid Fund Growth ₹2,654.67
↑ 0.45 ₹25,538 0.6 1.8 3.6 7.2 7.1 7.45% 1M 6D 1M 6D Aditya Birla Sun Life Liquid Fund Growth ₹384.323
↑ 0.06 ₹38,638 0.6 1.8 3.6 7.2 7.1 7.55% 1M 28D 1M 28D UTI Liquid Cash Plan Growth ₹3,913.21
↑ 0.70 ₹22,272 0.6 1.8 3.6 7.2 7 7.42% 1M 26D 1M 26D Mirae Asset Cash Management Fund Growth ₹2,501.59
↑ 0.43 ₹11,106 0.6 1.8 3.6 7.2 7 7.33% 1M 6D 1M 6D ICICI Prudential Liquid Fund Growth ₹353.146
↑ 0.06 ₹45,939 0.6 1.8 3.6 7.2 7 7.51% 1M 26D 1M 29D IDFC Cash Fund Growth ₹2,884.01
↑ 0.47 ₹11,187 0.6 1.8 3.5 7.2 7 7.47% 1M 6D 1M 6D Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 15 Mar 24 Liquid
funds having AUM/Net Assets above 10,000 Crore
and managing funds for 5 or more years. Sorted on Last 1 Calendar Year Return
.
To provide a high level of liquidity with reasonable returns commensurating with low risk through a portfolio of money market and debt securities. However there can be no assurance that the investment objective of the scheme will be achieved. Axis Liquid Fund is a Debt - Liquid Fund fund was launched on 9 Oct 09. It is a fund with Low risk and has given a Below is the key information for Axis Liquid Fund Returns up to 1 year are on (Erstwhile Aditya Birla Sun Life Cash Plus Fund) An Open-ended liquid scheme with the objective to provide reasonable returns at a high level of safety and liquidity through judicious investments in high quality debt and money market instruments. Aditya Birla Sun Life Liquid Fund is a Debt - Liquid Fund fund was launched on 30 Mar 04. It is a fund with Low risk and has given a Below is the key information for Aditya Birla Sun Life Liquid Fund Returns up to 1 year are on The investment objective of the scheme is to generate steady and reasonable income, with low risk and high level of liquidity from a portfolio of money market securities and high quality debt. UTI Liquid Cash Plan is a Debt - Liquid Fund fund was launched on 11 Dec 03. It is a fund with Low risk and has given a Below is the key information for UTI Liquid Cash Plan Returns up to 1 year are on The investment objective of the scheme
is to generate consistent returns with a
high level of liquidity in a judicious
portfolio mix comprising of money
market and debt instruments. The
Scheme does not guarantee any
returns. Mirae Asset Cash Management Fund is a Debt - Liquid Fund fund was launched on 12 Jan 09. It is a fund with Low risk and has given a Below is the key information for Mirae Asset Cash Management Fund Returns up to 1 year are on (Erstwhile ICICI Prudential Liquid Plan) To provide reasonable returns, commensurate with low risk while providing a high level of liquidity, through investments made primarily in money market and debt securities. ICICI Prudential Liquid Fund is a Debt - Liquid Fund fund was launched on 17 Nov 05. It is a fund with Low risk and has given a Below is the key information for ICICI Prudential Liquid Fund Returns up to 1 year are on To generate optimal returns with high liquidity by investing in high quality money market and debt instruments. However there is no assurance that the investment objective of the scheme will be realized. IDFC Cash Fund is a Debt - Liquid Fund fund was launched on 4 Jun 08. It is a fund with Low risk and has given a Below is the key information for IDFC Cash Fund Returns up to 1 year are on 1. Axis Liquid Fund
CAGR/Annualized
return of 7% since its launch. Ranked 21 in Liquid Fund
category. Return for 2023 was 7.1% , 2022 was 4.9% and 2021 was 3.3% . Axis Liquid Fund
Growth Launch Date 9 Oct 09 NAV (15 Mar 24) ₹2,654.67 ↑ 0.45 (0.02 %) Net Assets (Cr) ₹25,538 on 31 Jan 24 Category Debt - Liquid Fund AMC Axis Asset Management Company Limited Rating ☆☆☆☆ Risk Low Expense Ratio 0.22 Sharpe Ratio 1.01 Information Ratio 0 Alpha Ratio 0 Min Investment 500 Min SIP Investment 1,000 Exit Load NIL Yield to Maturity 7.45% Effective Maturity 1 Month 6 Days Modified Duration 1 Month 6 Days Growth of 10,000 investment over the years.
Date Value 28 Feb 19 ₹10,000 29 Feb 20 ₹10,633 28 Feb 21 ₹11,048 28 Feb 22 ₹11,419 28 Feb 23 ₹12,031 29 Feb 24 ₹12,902 Returns for Axis Liquid Fund
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 15 Mar 24 Duration Returns 1 Month 0.6% 3 Month 1.8% 6 Month 3.6% 1 Year 7.2% 3 Year 5.4% 5 Year 5.2% 10 Year 15 Year Since launch 7% Historical performance (Yearly) on absolute basis
Year Returns 2023 7.1% 2022 4.9% 2021 3.3% 2020 4.3% 2019 6.6% 2018 7.5% 2017 6.7% 2016 7.6% 2015 8.4% 2014 9.1% Fund Manager information for Axis Liquid Fund
Name Since Tenure Devang Shah 5 Nov 12 11.33 Yr. Aditya Pagaria 13 Aug 16 7.55 Yr. Sachin Jain 3 Jul 23 0.66 Yr. Data below for Axis Liquid Fund as on 31 Jan 24
Asset Allocation
Asset Class Value Cash 99.73% Other 0.27% Debt Sector Allocation
Sector Value Cash Equivalent 77% Government 14.82% Corporate 7.91% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity Clearing Corporation Of India Ltd
CBLO/Reverse Repo | -12% ₹3,194 Cr Reliance Industries Limited
Commercial Paper | -4% ₹1,159 Cr 23,300
↓ -1,500 Small Industries Development Bank of India
Commercial Paper | -4% ₹1,031 Cr 21,000
↑ 21,000 Canara Bank
Certificate of Deposit | -3% ₹891 Cr 17,900 Reliance Retail Ventures Limited
Commercial Paper | -3% ₹844 Cr 17,000 91 DTB 25042024
Sovereign Bonds | -3% ₹740 Cr 75,000,000
↑ 75,000,000 National Bank for Agriculture and Rural Development
Commercial Paper | -3% ₹695 Cr 14,000 Canara Bank
Domestic Bonds | -2% ₹688 Cr 14,000
↑ 14,000 Punjab National Bank
Certificate of Deposit | -2% ₹600 Cr 12,000
↓ -12,000 National Bank For Agriculture And Rural Development
Commercial Paper | -2% ₹548 Cr 11,000
↓ -4,000 2. Aditya Birla Sun Life Liquid Fund
CAGR/Annualized
return of 7% since its launch. Ranked 15 in Liquid Fund
category. Return for 2023 was 7.1% , 2022 was 4.8% and 2021 was 3.3% . Aditya Birla Sun Life Liquid Fund
Growth Launch Date 30 Mar 04 NAV (15 Mar 24) ₹384.323 ↑ 0.06 (0.02 %) Net Assets (Cr) ₹38,638 on 31 Jan 24 Category Debt - Liquid Fund AMC Birla Sun Life Asset Management Co Ltd Rating ☆☆☆☆ Risk Low Expense Ratio 0.33 Sharpe Ratio 0.84 Information Ratio -3.6 Alpha Ratio -0.2 Min Investment 5,000 Min SIP Investment 500 Exit Load NIL Yield to Maturity 7.55% Effective Maturity 1 Month 28 Days Modified Duration 1 Month 28 Days Growth of 10,000 investment over the years.
Date Value 28 Feb 19 ₹10,000 29 Feb 20 ₹10,637 28 Feb 21 ₹11,055 28 Feb 22 ₹11,423 28 Feb 23 ₹12,030 29 Feb 24 ₹12,899 Returns for Aditya Birla Sun Life Liquid Fund
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 15 Mar 24 Duration Returns 1 Month 0.6% 3 Month 1.8% 6 Month 3.6% 1 Year 7.2% 3 Year 5.3% 5 Year 5.2% 10 Year 15 Year Since launch 7% Historical performance (Yearly) on absolute basis
Year Returns 2023 7.1% 2022 4.8% 2021 3.3% 2020 4.3% 2019 6.7% 2018 7.4% 2017 6.7% 2016 7.7% 2015 8.4% 2014 9.2% Fund Manager information for Aditya Birla Sun Life Liquid Fund
Name Since Tenure Sunaina Cunha 15 Jul 11 12.64 Yr. Kaustubh Gupta 15 Jul 11 12.64 Yr. Sanjay Pawar 1 Jul 22 1.67 Yr. Dhaval Joshi 21 Nov 22 1.28 Yr. Data below for Aditya Birla Sun Life Liquid Fund as on 31 Jan 24
Asset Allocation
Asset Class Value Cash 98.71% Debt 1.04% Other 0.25% Debt Sector Allocation
Sector Value Cash Equivalent 69.86% Corporate 19.69% Government 10.2% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity Reverse Repo
CBLO/Reverse Repo | -7% ₹2,735 Cr 91 DTB 07032024
Sovereign Bonds | -6% ₹2,491 Cr 250,000,000 Net Receivables / (Payables)
CBLO | -4% -₹1,699 Cr Bank Of Baroda
Certificate of Deposit | -3% ₹1,143 Cr 23,000 Bank Of Baroda
Certificate of Deposit | -2% ₹995 Cr 20,000 National Bank For Agriculture And Rural Development
Commercial Paper | -2% ₹993 Cr 20,000 Canfin Homes Limited
Commercial Paper | -2% ₹993 Cr 20,000 India (Republic of)
- | -2% ₹984 Cr 99,000,000 India (Republic of)
- | -2% ₹983 Cr 100,000,000
↑ 100,000,000 Axis Bank Limited
Certificate of Deposit | -2% ₹932 Cr 19,000
↑ 19,000 3. UTI Liquid Cash Plan
CAGR/Annualized
return of 6.8% since its launch. Ranked 32 in Liquid Fund
category. Return for 2023 was 7% , 2022 was 4.8% and 2021 was 3.3% . UTI Liquid Cash Plan
Growth Launch Date 11 Dec 03 NAV (15 Mar 24) ₹3,913.21 ↑ 0.70 (0.02 %) Net Assets (Cr) ₹22,272 on 31 Jan 24 Category Debt - Liquid Fund AMC UTI Asset Management Company Ltd Rating ☆☆☆ Risk Low Expense Ratio 0.23 Sharpe Ratio 0.73 Information Ratio 0 Alpha Ratio 0 Min Investment 500 Min SIP Investment 1,500 Exit Load NIL Yield to Maturity 7.42% Effective Maturity 1 Month 26 Days Modified Duration 1 Month 26 Days Growth of 10,000 investment over the years.
Date Value 28 Feb 19 ₹10,000 29 Feb 20 ₹10,628 28 Feb 21 ₹11,037 28 Feb 22 ₹11,407 28 Feb 23 ₹12,012 29 Feb 24 ₹12,878 Returns for UTI Liquid Cash Plan
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 15 Mar 24 Duration Returns 1 Month 0.6% 3 Month 1.8% 6 Month 3.6% 1 Year 7.2% 3 Year 5.3% 5 Year 5.2% 10 Year 15 Year Since launch 6.8% Historical performance (Yearly) on absolute basis
Year Returns 2023 7% 2022 4.8% 2021 3.3% 2020 4.2% 2019 6.6% 2018 7.4% 2017 6.7% 2016 7.7% 2015 8.3% 2014 9.1% Fund Manager information for UTI Liquid Cash Plan
Name Since Tenure Amit Sharma 7 Jul 17 6.65 Yr. Data below for UTI Liquid Cash Plan as on 31 Jan 24
Asset Allocation
Asset Class Value Cash 99.78% Other 0.22% Debt Sector Allocation
Sector Value Cash Equivalent 69.49% Government 21.13% Corporate 9.16% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity Net Current Assets
Net Current Assets | -16% ₹4,169 Cr HDFC Bank Limited
Certificate of Deposit | -3% ₹747 Cr 7,500,000,000 Indian Bank
Certificate of Deposit | -3% ₹673 Cr 6,750,000,000
↓ -250,000,000 91 DTB 21032024
Sovereign Bonds | -3% ₹671 Cr 6,750,000,000 Grasim Industries Ltd.
Commercial Paper | -2% ₹599 Cr 6,000,000,000 Indian Bank
Certificate of Deposit | -2% ₹545 Cr 5,500,000,000
↓ -1,000,000,000 91 DTB 29022024
Sovereign Bonds | -2% ₹499 Cr 5,000,000,000 Larsen And Toubro Limited
Commercial Paper | -2% ₹499 Cr 5,000,000,000 Bank Of Maharashtra
Certificate of Deposit | -2% ₹498 Cr 5,000,000,000 National Bank For Agriculture And Rural Development
Commercial Paper | -2% ₹498 Cr 5,000,000,000 4. Mirae Asset Cash Management Fund
CAGR/Annualized
return of 6.2% since its launch. Ranked 48 in Liquid Fund
category. Return for 2023 was 7% , 2022 was 4.8% and 2021 was 3.3% . Mirae Asset Cash Management Fund
Growth Launch Date 12 Jan 09 NAV (15 Mar 24) ₹2,501.59 ↑ 0.43 (0.02 %) Net Assets (Cr) ₹11,106 on 31 Jan 24 Category Debt - Liquid Fund AMC Mirae Asset Global Inv (India) Pvt. Ltd Rating ☆☆ Risk Low Expense Ratio 0.19 Sharpe Ratio 0.57 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 1,000 Exit Load NIL Yield to Maturity 7.33% Effective Maturity 1 Month 6 Days Modified Duration 1 Month 6 Days Growth of 10,000 investment over the years.
Date Value 28 Feb 19 ₹10,000 29 Feb 20 ₹10,624 28 Feb 21 ₹11,033 28 Feb 22 ₹11,403 28 Feb 23 ₹12,009 29 Feb 24 ₹12,873 Returns for Mirae Asset Cash Management Fund
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 15 Mar 24 Duration Returns 1 Month 0.6% 3 Month 1.8% 6 Month 3.6% 1 Year 7.2% 3 Year 5.3% 5 Year 5.2% 10 Year 15 Year Since launch 6.2% Historical performance (Yearly) on absolute basis
Year Returns 2023 7% 2022 4.8% 2021 3.3% 2020 4.2% 2019 6.6% 2018 7.3% 2017 6.6% 2016 7.2% 2015 7.8% 2014 8.7% Fund Manager information for Mirae Asset Cash Management Fund
Name Since Tenure Abhishek Iyer 28 Dec 20 3.17 Yr. Data below for Mirae Asset Cash Management Fund as on 31 Jan 24
Asset Allocation
Asset Class Value Cash 99.81% Other 0.19% Debt Sector Allocation
Sector Value Cash Equivalent 61.44% Government 22.99% Corporate 15.38% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity Treps
CBLO/Reverse Repo | -7% ₹748 Cr Net Receivables / (Payables)
Net Current Assets | -5% -₹542 Cr India (Republic of)
- | -3% ₹295 Cr 30,000,000
↑ 30,000,000 National Bank For Agriculture And Rural Development
Commercial Paper | -2% ₹273 Cr 27,500,000 91 DTB 21032024
Sovereign Bonds | -2% ₹224 Cr 22,500,000 Punjab National Bank
Certificate of Deposit | -2% ₹200 Cr 20,000,000 91 DTB 22022024
Sovereign Bonds | -2% ₹200 Cr 20,000,000 Sikka Port And Terminal Limited
Commercial Paper | -2% ₹200 Cr 20,000,000 Reliance Retail Ventures Limited
Commercial Paper | -2% ₹199 Cr 20,000,000 Punjab National Bank
Certificate of Deposit | -2% ₹199 Cr 20,000,000 5. ICICI Prudential Liquid Fund
CAGR/Annualized
return of 7.1% since its launch. Ranked 20 in Liquid Fund
category. Return for 2023 was 7% , 2022 was 4.8% and 2021 was 3.2% . ICICI Prudential Liquid Fund
Growth Launch Date 17 Nov 05 NAV (15 Mar 24) ₹353.146 ↑ 0.06 (0.02 %) Net Assets (Cr) ₹45,939 on 31 Jan 24 Category Debt - Liquid Fund AMC ICICI Prudential Asset Management Company Limited Rating ☆☆☆☆ Risk Low Expense Ratio 0.29 Sharpe Ratio 0.43 Information Ratio -5.47 Alpha Ratio -0.23 Min Investment 500 Min SIP Investment 99 Exit Load NIL Yield to Maturity 7.51% Effective Maturity 1 Month 29 Days Modified Duration 1 Month 26 Days Growth of 10,000 investment over the years.
Date Value 28 Feb 19 ₹10,000 29 Feb 20 ₹10,627 28 Feb 21 ₹11,045 28 Feb 22 ₹11,408 28 Feb 23 ₹12,006 29 Feb 24 ₹12,868 Returns for ICICI Prudential Liquid Fund
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 15 Mar 24 Duration Returns 1 Month 0.6% 3 Month 1.8% 6 Month 3.6% 1 Year 7.2% 3 Year 5.3% 5 Year 5.2% 10 Year 15 Year Since launch 7.1% Historical performance (Yearly) on absolute basis
Year Returns 2023 7% 2022 4.8% 2021 3.2% 2020 4.3% 2019 6.6% 2018 7.4% 2017 6.6% 2016 7.7% 2015 8.3% 2014 9.1% Fund Manager information for ICICI Prudential Liquid Fund
Name Since Tenure Rohan Maru 19 Sep 13 10.45 Yr. Nikhil Kabra 1 Dec 23 0.25 Yr. Darshil Dedhia 12 Jun 23 0.72 Yr. Data below for ICICI Prudential Liquid Fund as on 31 Jan 24
Asset Allocation
Asset Class Value Cash 99.8% Other 0.2% Debt Sector Allocation
Sector Value Cash Equivalent 77.54% Government 12.88% Corporate 9.38% Credit Quality
Rating Value AA 0.16% AAA 99.84% Top Securities Holdings / Portfolio
Name Holding Value Quantity Treps
CBLO/Reverse Repo | -7% ₹3,781 Cr Deutsche Bank
Certificate of Deposit | -3% ₹1,497 Cr 30,000 364 DTB 29022024
Sovereign Bonds | -3% ₹1,496 Cr 150,000,000 91 DTB 14032024
Sovereign Bonds | -3% ₹1,493 Cr 150,000,000 Indian Bank
Certificate of Deposit | -3% ₹1,445 Cr 29,100 Bank Of Baroda
Certificate of Deposit | -2% ₹1,243 Cr 25,000 364 DTB 14032024
Sovereign Bonds | -2% ₹1,090 Cr 109,500,000
↑ 44,500,000 National Bank For Agriculture And Rural Development
Commercial Paper | -2% ₹996 Cr 20,000 Reliance Industries Ltd.
Commercial Paper | -2% ₹996 Cr 20,000 National Bank For Agriculture And Rural Development
Commercial Paper | -2% ₹995 Cr 20,000 6. IDFC Cash Fund
CAGR/Annualized
return of 6.9% since its launch. Ranked 26 in Liquid Fund
category. Return for 2023 was 7% , 2022 was 4.8% and 2021 was 3.2% . IDFC Cash Fund
Growth Launch Date 4 Jun 08 NAV (15 Mar 24) ₹2,884.01 ↑ 0.47 (0.02 %) Net Assets (Cr) ₹11,187 on 31 Jan 24 Category Debt - Liquid Fund AMC IDFC Asset Management Company Limited Rating ☆☆☆ Risk Low Expense Ratio 0.23 Sharpe Ratio 0.35 Information Ratio 0 Alpha Ratio 0 Min Investment 100 Min SIP Investment 100 Exit Load NIL Yield to Maturity 7.47% Effective Maturity 1 Month 6 Days Modified Duration 1 Month 6 Days Growth of 10,000 investment over the years.
Date Value 28 Feb 19 ₹10,000 29 Feb 20 ₹10,604 28 Feb 21 ₹10,996 28 Feb 22 ₹11,361 28 Feb 23 ₹11,960 29 Feb 24 ₹12,818 Returns for IDFC Cash Fund
absolute basis
& more than 1 year are on CAGR (Compound Annual Growth Rate)
basis. as on 15 Mar 24 Duration Returns 1 Month 0.6% 3 Month 1.8% 6 Month 3.5% 1 Year 7.2% 3 Year 5.3% 5 Year 5.1% 10 Year 15 Year Since launch 6.9% Historical performance (Yearly) on absolute basis
Year Returns 2023 7% 2022 4.8% 2021 3.2% 2020 4% 2019 6.3% 2018 7.3% 2017 6.6% 2016 7.6% 2015 8.4% 2014 9.1% Fund Manager information for IDFC Cash Fund
Name Since Tenure Harshal Joshi 15 Sep 15 8.47 Yr. Brijesh Shah 1 Dec 21 2.25 Yr. Sreejith Balasubramanian 31 Aug 23 0.5 Yr. Data below for IDFC Cash Fund as on 31 Jan 24
Asset Allocation
Asset Class Value Cash 99.8% Other 0.2% Debt Sector Allocation
Sector Value Cash Equivalent 71.43% Government 15.76% Corporate 12.61% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity Triparty Repo
CBLO/Reverse Repo | -16% ₹2,248 Cr 91 DTB 14032024
Sovereign Bonds | -7% ₹1,040 Cr 104,500,000 India (Republic of)
- | -7% ₹935 Cr 95,000,000
↑ 95,000,000 Axis Bank Ltd.
Debentures | -3% ₹491 Cr 50,000,000
↑ 50,000,000 Tata Capital Limited
Commercial Paper | -3% ₹491 Cr 50,000,000
↑ 50,000,000 Reliance Retail Ventures Limited
Commercial Paper | -3% ₹491 Cr 50,000,000
↑ 50,000,000 Export-Import Bank of India
Commercial Paper | -3% ₹491 Cr 50,000,000
↑ 50,000,000 Reliance Retail Ventures Limited
Commercial Paper | -3% ₹399 Cr 40,000,000 Bank of Baroda
Debentures | -3% ₹393 Cr 40,000,000
↑ 40,000,000 Punjab National Bank
Certificate of Deposit | -2% ₹349 Cr 35,000,000
When looking for a liquid mutual fund, the past return should not be the only Factor for consideration. Other factors like fund size, track record, credit quality of Underlying securities should also be kept in mind.
Liquid funds come with different plans like a daily dividend plan, weekly dividend plan, monthly dividend plan and growth plans. In the growth option, profits made by the scheme are invested back into it. This results in the NAV (Net Asset Value) of the scheme rising over time. In the dividend option, the profits made by the fund are not re-invested. Dividends are distributed to the investor from time to time. Investors can choose their plan as per their convenience and liquidity needs.
Mutual funds charge a fee to manage your funds called an expense ratio. As per SEBI norms, the upper limit of expense ratio is 2.25%
. In case of liquid funds, they maintain a lower expense ratio to provide relatively higher returns over a short period of time.
Plan your investment horizon. Liquid funds are exclusively meant to invest surplus cash over a very short period of time that is for 91 days. So, if you have an idle cash, you can invest here for a short period and earn better returns than bank Savings Account. In case you have a longer investment horizon of up to 1 year, then you may consider investing in short duration funds to get relatively higher returns.
Considering the fact that liquid mutual funds are short-term investments with a low maturity period, the majority of the funds under this category do not levy any exit load on redemption. Also, if there exists any exit load, it is very nominal and usually not more than a week. Liquid funds generally do not have an exit load given they are very short investment products.
Generally, the Volatility of liquid funds is low as the investment lasts for a few days to weeks. So, the risk of loss in investment is quite less. However, it is suggested to make a liquid fund investment considering the market condition to avoid the opportunity of loss.
Given that liquid mutual funds are very short-term investment options, liquid funds do not have any lock-in period. Liquid Funds can be invested for a time period as short as one day going upto a couple of weeks.
Liquid funds are one of the best short-term investments during a high Inflation period. In the high inflation period, the interest rate on the liquid fund is high. Thus, helping liquid mutual funds to earn good returns. The liquid fund returns are usually higher than that of other traditional investments like bank fixed deposits or savings accounts. However, it is suggested to invest in best liquid funds choosing a right option (growth, dividend payout, dividend re-investment) suiting your needs.
Generally, liquid fund returns receive in the form of dividends are not taxed in the hands of investors. However, a Dividend Distribution Tax (DDT) of approximately 28% is deducted by the mutual fund company from the dividends. Moreover, for the investors who have opted for growth option, a short-term Capital Gain tax is deducted as per the individual’s tax slab. This tax Deduction is same as that of a savings account.
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