Liquid Mutual Funds comes under the category of debt funds with an average maturity period of 91 days. These debt funds invest in fixed income structures like the commercial papers, government securities, treasury bills etc. For liquid mutual funds, the NAV if calculated for 365 days or 1 year, also when compared with the other debt funds these funds carry lowest interest rate risks. This debt fund investment scheme offers capital protection and liquidity to the investors. Liquid Mutual Fund invest scheme is good option for the investors who looking for minimal maturity period and low risk. Also, liquid funds help you get good returns along with the liquidity than the savings account. For many investors the liquid mutual funds work as a steppingstone for further investment in equity funds, as these funds offers transfer plans without much hassle.
What are the benefits of Liquid Mutual Funds?
- Short term investment plan
- No lock periods.
- NAV calculated for 365 days.
- Withdrawal possible within 24 hours
- No entry and exit fee applicable.
- Low interest rate risks
What are the Features of the Liquid Mutual Debt Funds?
Risks:
Liquid Funds have low interest rate risks, and mostly the NAV does not fluctuate.
Expense Ratio:
Expense ratio is the fund maintenance charge, when compared to the other debt funds the expense ratio of the Liquid Mutual Funds is very low that is 2.25%.
Liquidity:
Unlike the other investment schemes, these debt funds offers great liquidity, the investor can get their money with in 24 hour time.
Instant Redemption:
Liquid Mutual debt funds offers instant redemption (Terms Apply).
No Loads:
No entry and exit fee are applicable over these investment schemes.
Returns:
Liquid Funds have proven 4% better performing in giving returns than the normal savings account. On average these funds offer 7 to 9% of returns.
Tax:
Liquid funds are subjected to tax under 2 slabs, that is short term capital gain tax and long-term capital gain tax.
List of India's Top Liquid Funds:
- Quant Liquid Fund
- IDBI Liquid Fund
- Franklin India Liquid Fund
- Edelweiss Liquid Fund
- Mahindra Liquid Fund
- Aditya Birla Sun Life Liquid Fund
- Nippon India Liquid Fund
- PGIM India Insta Cash Fund
- Axis Liquid Fund
- LIC MF Liquid Fund
- Tata Liquid Fund
- ICICI Prudential Liquid Fund
Bottom Line:
Liquid Funds are the debt funds that has multiple advantages than the other debt funds, they offer liquidity, good returns and comes with a lower interest rate. Apart from that these funds comes with a short maturity period offering with good returns.