What is a liquid mutual fund?
Table of Contents
What is a liquid mutual fund?
A Liquid Mutual Fund is a debt fund which invests in fixed-income instruments like commercial paper, government securities, treasury bills, etc. with a maturity of up to 91 days. These funds carry the lowest interest-rate risk in the debt funds category.
How much return we get in liquid fund?
Top 5 Liquid Funds in India
| Fund name | 1-year return |
|---|---|
| Aditya Birla Sun Life Liquid Fund Growth | 7.49\% |
| Axis Liquid Fund Growth | 7.47\% |
| UTI Liquid Fund – Cash Plan Growth | 7.47\% |
| ICICI Prudential Liquid Fund Growth | 7.40\% |
Can liquid funds go negative?
The liquid funds can go down in value. However, the likelihood of them going down in value is not that often, owing to the stringent regulations. But, if at all that happens, the magnitude of that fall could be very nominal and can recover in seven-eight days.
Is liquid fund a mutual fund?
Definition: Liquid funds are a type of mutual funds that invest in securities with a residual maturity of up to 91 days. Assets invested are not tied up for a long time as liquid funds do not have a lock-in period. An investor looking for better returns prefers investing in a liquid fund over fixed deposit.
Are liquid mutual funds safe?
Although liquid funds are not entirely risk-free, however, they are low risk-low returns instruments. As they invest predominantly in debt instruments, they are subject to interest rate risk and credit risk. In this way, the fund manager reduces credit risk by holding a well-diversified portfolio of securities.
When can I leave liquid fund?
Liquid funds, as the name suggests, are open-ended mutual funds. Therefore, you can redeem your units at any time. However, a small charge in the form of an exit load is levied on exiting within seven days from the date of allotment. The redemption requests are generally processed within a working day.
Is it good idea to invest in liquid funds?
“While the investment in short to medium duration funds earns a higher yield, the liquid fund exposure reduces the overall impact of interest rates movements on the fixed income portfolio,” he says. Investments in liquid funds can also be used as emergency funds.
Which is the best liquid mutual funds?
Aditya Birla Sun Life Liquid Fund. (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.
Why mutual funds are bad for investment?
Most mutual funds are bad.
What and why to invest in mutual funds?
Mutual Funds Offer Diversification Diversification may be the greatest benefit of mutual funds.
Should you invest in liquid funds?
Lower risks. To begin with,Liquid Funds are supposed to be least risky as they hold high quality papers.