liquid mutual funds

Top 5 Liquid mutual funds in India. All you need to know

As per SEBI regulations, a liquid fund is one that invests in debt and money market instruments with a maturity of up to 91 days only, such as Certificate of Deposits, Treasury Bills (T-bills), Commercial Paper (CP), etc.

The aim of these funds is to provide capital preservation/safety along with reasonable returns.

Advantages:

  1. High Liquidity: The main aim of such funds is to provide liquidity for their investors. So, investors can redeem their units at any time.
  2. Low Exit Loads: These funds have exit loads of less than 7 days. So, you can redeem your funds after 7 days without any penalties.
  3. Indexation Benefit: Long-term taxation will be calculated based on inflation. Only returns over the inflation will be taxable.
  4. Better Returns: Investors can enjoy better returns than their regular savings bank account by investing in these funds.

Top 5 liquid mutual funds

S.No.Fund Name3-Yr Annualized Performance
1Quant Liquid Plan Growth Option Direct Plan5.01 %
2IDBI Liquid Fund Direct-Growth4.27 %
3Mahindra Manulife Liquid Fund Direct Plan-Growth4.23 %
4Edelweiss Liquid Fund Direct-Growth4.23 %
5Franklin India Liquid Super Institutional Plan Fund Direct-Growth4.22 %
Note: Data as of July 25, 2022
Source: Morningstar

1. Quant liquid plan growth option direct plan

Fund analysis:

The fund is top performing fund in its category. The fund has a low-risk profile.

The fund has outperformed the category and the benchmark. The fund has invested in high-quality bonds i.e., AAA-rated. The fund can be used to park your emergency funds.

ProsCons
High liquidity. Invested in AAA quality bonds.High expense ratio.
Note: CRISIL Liquid Fund BI Index

2. IDBI liquid fund direct growth

Fund analysis:

The investment objective of the Scheme will be to provide investors with a high level of liquidity along with regular income for their investment.

The Scheme will endeavor to achieve this objective through an allocation of the investment corpus in a low-risk portfolio of money market and debt instruments with a maturity of up to 91 days.

The fund has outperformed the category over the period. The fund has invested 100% in AAA-rated bonds. The fund is a good alternative to fixed deposits (F.D.)

ProsCons
Low Expense Ratio.Attractive risk-to-reward ratio.Fund has underperformed the benchmark over 5-Yr trailing returns.
Note: CRISIL Liquid Fund BI Index

Read more: Top 5 dividend-paying mutual funds

3. Mahindra Manulife liquid fund direct plan growth

Fund analysis:

The Scheme seeks to deliver reasonable market-related returns with lower risk and higher liquidity through a portfolio of money market and debt instruments.

The fund has outperformed the category average over different trailing periods. The fund holds high-quality debt and money market instruments.

ProsCons
Fund has outperformed the category average over different trailing periods. Low expense ratio.Fund has underperformed the benchmark over 5-Yr trailing returns.
Note: CRISIL Liquid Fund BI Index
liquid mutual funds
Source: pexels

4. Edelweiss liquid fund direct growth

Fund analysis:

The fund’s objective is to provide reasonable returns, commensurate with low risk while providing a high level of liquidity, through a portfolio of money market and debt securities.

The fund has invested 100% in debt and money market instruments that have the highest rating i.e., AAA-rated bonds. The fund has delivered consistently better returns than the category average.

ProsCons
High liquidity. Invested in AAA quality bonds.Fund has underperformed the benchmark over 3-Yr & 5-Yr trailing returns.
Note: CRISIL Liquid Fund BI Index

Read more: Top 10 ELSS mutual funds in India

5. Franklin India Liquid super institutional plan fund direct growth

Fund analysis:

The fund’s objective is to provide current income along with high liquidity. The fund has relatively high volatility.

The fund is a good alternative to bank accounts along with high liquidity. The fund has invested in AAA-rated bonds and money market securities.

ProsCons
Invested in AAA quality bonds. High liquidity.Relatively high volatility.
Note: CRISIL Liquid Fund BI Index

Conclusion:

Liquid funds are a good alternative to bank accounts. Investors can also park their emergency funds in these mutual funds because of their high liquidity.

This results in better returns than regular savings bank account as the exit load is maximum for 7 days only.

Consult an expert advisor to get the right plan for you

Disclaimer:

This is not recommendation advice, use it for educational purposes only. Mutual Fund investments are subject to market risks, read all scheme-related documents carefully. The NAVs of the schemes may go up or down depending upon the factors and forces affecting the securities market including the fluctuations in the interest rates. The past performance of the mutual funds is not necessarily indicative of the future performance of the schemes

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