Liquid Mutual Fund

Introduction to Liquid Mutual Funds

Liquid funds are investment funds that are invested in fixed-income instruments. The funds mature within 91 days, such as certificates of deposit, Treasury bills, commercial papers, and other debt securities. On business days, liquid fund redemption requests are handled within 24 hours.

Liquid funds are the least volatile of all debt fund types because they primarily invest in high-quality fixed-income securities with short maturities. As a result, risk-averse investors would appreciate these funds.

Why Should You Invest in Liquid Mutual Funds?

Liquid funds do not have a lock-in duration or have one that is very short. Because of their short maturity period, liquid mutual funds pay the lowest interest rate of all short-term investments. There are no entry or exit loads to consider. 

Investors who want to store their surplus cash for a short period without causing a capital loss should consider liquid mutual funds. Liquid funds have far higher returns than a traditional savings account. If you have excess assets, and you consider putting them in liquid funds to gain a higher return on investment, without a doubt, it’s a good decision. 

If you receive dividends from liquid funds, they will be added to your net income and charged according to your tax bracket. The capital gains generated by liquid funds are subject to the same taxation laws as debt funds.

Best Liquid Funds in India

Some of the best liquid funds in India to invest in right now based on the past performance would be:

Tata Liquid Funds

About:

Tata Liquid Fund is a Debt-Liquid Fund that began trading on September 1, 2004. It is a low-risk fund with a CAGR/Annualized return of 7.3 percent since its inception. The Liquid Fund group is ranked 18th. Returns for 2020 were 4.3 percent, 6.6 percent in 2019, and 7.4 percent in 2018.

Growth

  • Launch Date- 1 Sep 04
  • NAV (16 Apr 2021)- ₹3,229.16 ↑ 0.28 (0.01 %)
  • Net Assets (Cr) -₹14,982 on 28 Feb 21 
  • Category Debt – Liquid Fund 
  • AMC- Tata Asset Management Limited 
  • Expense Ratio 0.34 
  • Sharpe Ratio- -0.34
  • Information Ratio- -2.02
  • Alpha Ratio- -0.5 
  • Min Investment- 5,000 
  • Min SIP Investment- 500
  • Yield to Maturity- 3.22%
  • Effective Maturity- 1 Month 4 Days
  • Modified Duration-1 Month 4 days 

Aditya Birla Sun Life Liquid Fund

About:

Aditya Birla is a businessman and philanthropist. Sun Life Liquid Fund is a Debt-Liquid Fund that began trading on March 30, 2004. It is a low-risk fund with a CAGR/Annualized return of 7.2 percent since its inception. The Liquid Fund group is ranked 15th. Returns for 2020 were 4.3 percent, 6.7 percent in 2019, and 7.4 percent in 2018.

Growth

  • Launch Date- 30 Mar 04 
  • NAV (16 Apr 2021)- ₹329.754 ↑ 0.03 (0.01 %) 
  • Net Assets (Cr)- ₹33,604 on 28 Feb 21 
  • Category Debt – Liquid Fund
  • AMC-Birla Sun Life Asset Management Co Ltd 
  • Expense Ratio– 0.28 
  • Sharpe Ratio –0.49 
  • Information Ratio –2.31 
  • Alpha Ratio –0.48
  • Min Investment- 5,000
  • Min SIP Investment- 1,000 
  • Yield to Maturity- 3.34%
  • Effective Maturity- 29 Days
  • Modified Duration-29 Days

Axis Liquid Fund

About:

On October 9, 2009, Axis Liquid Fund, a Debt-Liquid Fund, was released. It is a low-risk fund with a CAGR/Annualized return of 7.4 percent since its inception. The Liquid Fund group is ranked 21st. Returns for 2020 were 4.3 percent, 6.6 percent in 2019, and 7.5 percent in 2018.

Growth

  • Launch Date- 9 Oct 09
  • NAV (16 Apr 2021)- ₹2,275.86 ↑ 0.20 (0.01 %)
  • Net Assets (Cr)- ₹24,975 on 28 Feb 21 
  • Category Debt – Liquid Fund 
  • AMC- Axis Asset Management Company Limited 
  • Expense Ratio- 0.16 
  • Sharpe Ratio -0.53
  • Information Ratio- 0 
  • Alpha Ratio 0 
  • Min Investment- 500
  • Min SIP Investment-1,000 
  • Yield to Maturity- 3.29% 
  • Effective Maturity- 1 Month 5 Days
  • Modified Duration- 1 Month 4 Days

ICICI Prudential Liquid Fund

About:

On November 17, 2005, ICICI Prudential Liquid Fund, a Debt-Liquid Fund, was launched. It is a low-risk fund with a CAGR/Annualized return of 7.5 percent since its inception. The Liquid Fund group is ranked 20th. 

Returns for 2020 were 4.3 percent, 6.6 percent in 2019, and 7.4 percent in 2018.

Growth

  • Launch Date- 17 Nov 05 
  • NAV (16 Apr 2021)- ₹303.445 ↑ 0.03 (0.01 %)
  • Net Assets (Cr)- ₹42,470 on 28 Feb 21 
  • Category Debt – Liquid Fund 
  • AMC-ICICI Prudential Asset Management Company Limited 
  • Expense Ratio– 0.26
  • Sharpe Ratio- -0.47
  • Information Ratio- -2.59
  • Alpha Ratio- -0.49 
  • Min Investment- 500 
  • Min SIP Investment-99
  • Yield to Maturity- 3.37%
  • Effective Maturity- 1 Month 7 Days
  • Modified Duration- 1 Month 5 Days.

Nippon India Liquid Fund

About:

The Nippon India Liquid Fund is a Debt-Liquid Fund that was founded on December 9th, 2003. It is a low-risk fund with a CAGR/Annualized return of 7.1 percent since its inception. The Liquid Fund group is ranked 11th. Returns for 2020 were 4.3 percent, 6.7 percent in 2019, and 7.4 percent in 2018.

Growth

  • Launch Date- 9 Dec 03 
  • NAV (16 Apr 2021)- ₹5,004.17 ↑ 0.44 (0.01 %)
  • Net Assets (Cr)- ₹23,879 on 28 Feb 21 
  • Category Debt – Liquid Fund 
  • AMC- Nippon Life Asset Management Ltd. 
  • Expense Ratio– 0.26
  • Sharpe Ratio- -0.66 
  • Information Ratio- -2.24
  • Alpha Ratio- -0.51
  • Min Investment- 100 
  • Min SIP Investment- 100
  • Yield to Maturity- 3.25%
  • Effective Maturity- 25 Days 
  • Modified Duration- 24 Days. 

Advantages of the Best Liquid Mutual funds

The following are the primary benefits of investing in income funds:

  • Cost-effective

Unlike most other debt funds, liquid mutual funds are not actively controlled. As a result, liquid funds have a lower cost ratio, resulting in higher take-home returns.

  • Low-risk Profile

Liquid mutual funds, as previously stated, carry a lower risk since the underlying securities mature within 91 days. As a result, the probability of uncertainty is reduced.

  • Adaptability

Liquid funds are open-ended mutual funds, as the name implies. As a result, you can cash in your units at any time. However, if you leave within seven days, you will be charged a small exit load.

  1. Production Time is Reduced.

Redemption requests are usually handled within one business day. Some liquid funds allow for immediate redemption.

The only difference between Best Liquid Funds and Debt Mutual Funds, or money market Mutual Funds, is the investment length. Therefore, above mentioned are the best liquid mutual funds one can invest in.

Conclusion:

This piece of information gives you insights into the currently best mutual funds and what are the advantages of investing in them. Mutual funds are so far one of the fastest-growing investment streams to consider for one who is looking for open doors that accelerate growth and increase wealth.