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What Are Liquid Funds? Is It Good To Invest In Liquid Funds?

IndianMoney.com Research Team | Posted On Monday, January 28,2019, 01:29 PM

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What Are Liquid Funds? Is It Good To Invest In Liquid Funds?

 

 

What are Liquid Funds?

Liquid funds belong to the debt category of mutual funds. They invest in very short-term market instruments like treasury bills, government securities Certificates of Deposit, Commercial Paper and call money market. Liquid funds are gaining popularity these days as they offer much higher returns than savings bank account. The risk involved in liquid funds is low and are considered a viable alternative to fixed deposits.

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What Are Liquid Funds? Is It Good To Invest In Liquid Funds?

Why Should We Invest in Liquid Funds?

Following are the reasons why you should invest in liquid funds:

  • Lower risks

Liquid Funds are the least risky mutual funds as they hold high-end paper. Liquid funds have the shortest maturity amongst all debt mutual funds. They earn returns from the profits on the instruments. Liquid funds are not traded on stock markets.

  • Better returns

Liquid Funds offer returns of 6-8%, which is more than what savings bank accounts offer. This is one of the reasons why liquid funds are gaining popularity.

  • Easy liquidity

There are no exit charges on liquid funds. Fund houses allow investors to redeem funds quickly. Therefore, the procedure that was taking two days is now taking just two hours. Overall, on the basis of the cut-off schedule for redeeming, an investor would receive his/her money the next day.

  • Taxation

Like any other debt funds, liquid funds are also taxed. If the returns are realized within three years, then they are taxed as per the investor’s tax slab. However, if the returns are realized after three years, then they are taxed at 20% with indexation. Investors falling in the 30% tax slab can opt for dividend payout if they need regular cash flow for their commitments.

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Is It Good to Invest in Liquid Funds?

It is good to invest in liquid funds if you want to earn good returns in a short term. These funds offer returns in-line with fixed deposits and are highly liquid in nature.

Below mentioned are the reasons why it is good to invest in liquid funds:

  • Invest in Safer Instruments

Liquid funds are invested in debt fund instruments like CPs (Commercial papers), CDs (certificate of deposits) and various money market instruments.

  • No Minimum Investment

Investor can start investing in liquid funds starting as low as Rs 100 and there is on capping on the maximum investment.

  • Less Risky Funds

Liquid funds possess negligible risk and are considered comparatively safer than other funds. They do not offer guaranteed returns, because fund performance completely depends on changing market trends.

  • No Lock-in Period and Exit Load

Liquid funds have advantages of no lock-in period and no exit load, hence investors can withdraw or redeem funds anytime, without having to pay exit load on redeeming.

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How to Invest in Liquid Funds?

You must possess PAN Card and a bank account to invest in liquid funds. You can apply online on the official website of the Mutual Fund house. To apply offline, you must visit a branch of the mutual fund house with all the required documents. Liquid Funds don’t have any charges. The major advantage of liquid funds is there are no charges to redeem units anytime. In a very short time you can get in and out.

Liquid Funds Interest Rates

Returns earned on liquid funds directly depend on the performance of funds. In 2014, liquid funds offered staggering returns at 9-10% a year. But, the returns are on the decline since then. Liquid funds are invested only in debt securities with maturity of 91 days or less. The lower maturity profile fights off the interest rate risk, along with credit risk. Currently, liquid funds offer decent returns of 6-8% a year.

Liquid Funds in India
Following are the List of the Liquid Fund in India:

Scheme

Sub Category

Type

Min. Invest(Rs.)

  HSBC Cash Fund(DD)

Debt - Liquid Fund

Open ended

5,000.00

  HSBC Cash Fund(G)

Debt - Liquid Fund

Open ended

5,000.00

  HSBC Cash Fund(MD)

Debt - Liquid Fund

Open ended

5,000.00

  HSBC Cash Fund(WD)

Debt - Liquid Fund

Open ended

5,000.00

  Canara Rob Liquid Fund-Reg(WD)

Debt - Liquid Fund

Open ended

5,000.00

  Canara Rob Liquid Fund-Reg(DD)

Debt - Liquid Fund

Open ended

5,000.00

  Canara Rob Liquid Fund-Reg(G)

Debt - Liquid Fund

Open ended

5,000.00

  Essel Liquid Fund-Reg(G)

Debt - Liquid Fund

Open ended

1,000.00

  Essel Liquid Fund-Reg(DD)

Debt - Liquid Fund

Open ended

1,000.00

  Essel Liquid Fund-Reg(MD)

Debt - Liquid Fund

Open ended

1,000.00

  Essel Liquid Fund-Reg(WD)

Debt - Liquid Fund

Open ended

1,000.00

  L&T Liquid Fund(DD)

Debt - Liquid Fund

Open ended

1,00,000.00

  L&T Liquid Fund(G)

Debt - Liquid Fund

Open ended

10,000.00

  ICICI Pru Liquid Fund(QD)

Debt - Liquid Fund

Open ended

1,000.00

  ICICI Pru Liquid Fund(DD)

Debt - Liquid Fund

Open ended

1,000.00

  ICICI Pru Liquid Fund(G)

Debt - Liquid Fund

Open ended

1,000.00

  ICICI Pru Liquid Fund(MD)

Debt - Liquid Fund

Open ended

1,000.00

  ICICI Pru Liquid Fund(WD)

Debt - Liquid Fund

Open ended

1,000.00

  Reliance Liquid Fund(DD)

Debt - Liquid Fund

Open ended

10,000.00

  Reliance Liquid Fund(G)

Debt - Liquid Fund

Open ended

1,000.00

  Reliance Liquid Fund(MD)

Debt - Liquid Fund

Open ended

1,000.00

  Reliance Liquid Fund(WD)

Debt - Liquid Fund

Open ended

5,000.00

  Tata Liquid Fund-Reg(DD)

Debt - Liquid Fund

Open ended

5,000.00

  Tata Liquid Fund-Reg(G)

Debt - Liquid Fund

Open ended

5,000.00

  UTI Liquid Fund-Cash Plan-Inst(G)

Debt - Liquid Fund

Open ended

1,000.00

  UTI Liquid Fund-Cash Plan-Inst(DD)

Debt - Liquid Fund

Open ended

10,000.00

  UTI Liquid Fund-Cash Plan-Inst(MD)

Debt - Liquid Fund

Open ended

10,000.00

  UTI Liquid Fund-Cash Plan-Inst(WD)

Debt - Liquid Fund

Open ended

10,000.00

  Mirae Asset Cash Management-Reg(G)

Debt - Liquid Fund

Open ended

5,000.00

  Mirae Asset Cash Management-Reg(DD)

Debt - Liquid Fund

Open ended

5,000.00

  Mirae Asset Cash Management-Reg(WD)

Debt - Liquid Fund

Open ended

5,000.00

  ICICI Pru Liquid Fund(AD)

Debt - Liquid Fund

Open ended

1,000.00

  Axis Liquid Fund(G)

Debt - Liquid Fund

Open ended

1,000.00

  Axis Liquid Fund(DD)

Debt - Liquid Fund

Open ended

5,000.00

  Axis Liquid Fund(MD)

Debt - Liquid Fund

Open ended

5,000.00

  Indiabulls Liquid Fund(G)

Debt - Liquid Fund

Open ended

1,000.00

  Indiabulls Liquid Fund(DD)

Debt - Liquid Fund

Open ended

1,000.00

  Indiabulls Liquid Fund(FD)

Debt - Liquid Fund

Open ended

1,000.00

  Indiabulls Liquid Fund(WD)

Debt - Liquid Fund

Open ended

1,000.00

  Indiabulls Liquid Fund(MD)

Debt - Liquid Fund

Open ended

1,000.00

  BNP Paribas Liquid Fund(DD)

Debt - Liquid Fund

Open ended

5,000.00

  BNP Paribas Liquid Fund(G)

Debt - Liquid Fund

Open ended

5,000.00

  BNP Paribas Liquid Fund(WD)

Debt - Liquid Fund

Open ended

5,000.00

  DHFL Pramerica Insta Cash Fund(G)

Debt - Liquid Fund

Open ended

1,000.00

  DHFL Pramerica Insta Cash Fund(DD)

Debt - Liquid Fund

Open ended

1,000.00

  DHFL Pramerica Insta Cash Fund(MD)

Debt - Liquid Fund

Open ended

1,000.00

  DHFL Pramerica Insta Cash Fund(WD)

Debt - Liquid Fund

Open ended

1,000.00

  Kotak Liquid Fund-Reg(DD)

Debt - Liquid Fund

Open ended

5,000.00

  Kotak Liquid Fund-Reg(G)

Debt - Liquid Fund

Open ended

5,000.00

  LIC MF Liquid(D)

Debt - Liquid Fund

Open ended

5,000.00

  LIC MF Liquid(G)

Debt - Liquid Fund

Open ended

5,000.00

  Invesco India Liquid Fund(DD)

Debt - Liquid Fund

Open ended

5,000.00

  Invesco India Liquid Fund(G)

Debt - Liquid Fund

Open ended

5,000.00

  Invesco India Liquid Fund(MD)

Debt - Liquid Fund

Open ended

5,000.00

  Invesco India Liquid Fund(WD)

Debt - Liquid Fund

Open ended

5,000.00

  SBI Liquid Fund(DD)

Debt - Liquid Fund

Open ended

50,000.00

  SBI Liquid Fund(FD)

Debt - Liquid Fund

Open ended

50,000.00

  SBI Liquid Fund(G)

Debt - Liquid Fund

Open ended

5,000.00

  SBI Liquid Fund(WD)

Debt - Liquid Fund

Open ended

50,000.00

  Franklin India Liquid Fund-Super Inst(DD)

Debt - Liquid Fund

Open ended

10,000.00

  Franklin India Liquid Fund-Super Inst(G)

Debt - Liquid Fund

Open ended

10,000.00

  Franklin India Liquid Fund-Super Inst(WD)

Debt - Liquid Fund

Open ended

25,00,000.00

  BOI AXA Liquid Fund-Reg(G)

Debt - Liquid Fund

Open ended

5,000.00

  BOI AXA Liquid Fund-Reg(DD)

Debt - Liquid Fund

Open ended

5,000.00

  BOI AXA Liquid Fund-Reg(WD)

Debt - Liquid Fund

Open ended

5,000.00

  Baroda Liquid Fund(G)

Debt - Liquid Fund

Open ended

5,000.00

  Baroda Liquid Fund(DD)

Debt - Liquid Fund

Open ended

5,000.00

  Baroda Liquid Fund(WD)

Debt - Liquid Fund

Open ended

5,000.00

  IDBI Liquid Fund(G)

Debt - Liquid Fund

Open ended

5,000.00

  IDBI Liquid Fund(DD)

Debt - Liquid Fund

Open ended

5,000.00

  IDBI Liquid Fund(WD)

Debt - Liquid Fund

Open ended

5,000.00

  IDBI Liquid Fund(MD)

Debt - Liquid Fund

Open ended

5,000.00

  Aditya Birla SL Liquid Fund(DD)

Debt - Liquid Fund

Open ended

1,000.00

  Aditya Birla SL Liquid Fund(G)

Debt - Liquid Fund

Open ended

1,000.00

  Aditya Birla SL Liquid Fund(WD)

Debt - Liquid Fund

Open ended

1,000.00

  DSP Liquidity Fund-Reg(DD)

Debt - Liquid Fund

Open ended

1,000.00

  DSP Liquidity Fund-Reg(G)

Debt - Liquid Fund

Open ended

1,000.00

  DSP Liquidity Fund-Reg(WD)

Debt - Liquid Fund

Open ended

1,000.00

  IDFC Cash Fund-Reg(DD)

Debt - Liquid Fund

Open ended

1,000.00

  IDFC Cash Fund-Reg(G)

Debt - Liquid Fund

Open ended

1,000.00

  IDFC Cash Fund-Reg(MD)

Debt - Liquid Fund

Open ended

1,000.00

  IDFC Cash Fund-Reg(WD)

Debt - Liquid Fund

Open ended

1,000.00

  HDFC Liquid Fund(DD)

Debt - Liquid Fund

Open ended

10,000.00

  HDFC Liquid Fund(G)

Debt - Liquid Fund

Open ended

5,000.00

  HDFC Liquid Fund(MD)

Debt - Liquid Fund

Open ended

5,000.00

  HDFC Liquid Fund(WD)

Debt - Liquid Fund

Open ended

5,000.00

  Sundaram Money Fund-Reg(MD)

Debt - Liquid Fund

Open ended

1,000.00

  Sundaram Money Fund-Reg(DD)

Debt - Liquid Fund

Open ended

1,000.00

  Sundaram Money Fund-Reg(WD)

Debt - Liquid Fund

Open ended

1,000.00

  Sundaram Money Fund-Reg(G)

Debt - Liquid Fund

Open ended

1,000.00

  Edelweiss Liquid Fund-Reg(G)

Debt - Liquid Fund

Open ended

5,000.00

  Edelweiss Liquid Fund-Reg(DD)

Debt - Liquid Fund

Open ended

5,000.00

  Edelweiss Liquid Fund-Reg(MD)

Debt - Liquid Fund

Open ended

5,000.00

  Edelweiss Liquid Fund-Reg(WD)

Debt - Liquid Fund

Open ended

5,000.00

  Mahindra Liquid Fund-Reg(G)

Debt - Liquid Fund

Open ended

1,000.00

  Mahindra Liquid Fund-Reg(DD)

Debt - Liquid Fund

Open ended

1,000.00

  Mahindra Liquid Fund-Reg(WD)

Debt - Liquid Fund

Open ended

1,000.00

  Union Liquid Fund(G)

Debt - Liquid Fund

Open ended

5,000.00

  Union Liquid Fund(DD)

Debt - Liquid Fund

Open ended

5,000.00

  Union Liquid Fund(WD)

Debt - Liquid Fund

Open ended

5,000.00

  Union Liquid Fund(FDP)

Debt - Liquid Fund

Open ended

5,000.00

  Union Liquid Fund(MD)

Debt - Liquid Fund

Open ended

5,000.00

  Union Liquid Fund(FDR)

Debt - Liquid Fund

Open ended

5,000.00

  Union Liquid Fund(MDR)

Debt - Liquid Fund

Open ended

5,000.00

  Quant Liquid Plan(DD)

Debt - Liquid Fund

Open ended

1,000.00

  Quant Liquid Plan(G)

Debt - Liquid Fund

Open ended

1,000.00

  Quant Liquid Plan(MD)

Debt - Liquid Fund

Open ended

1,000.00

  Quant Liquid Plan(WD)

Debt - Liquid Fund

Open ended

1,000.00

  JM Liquid Fund(DD)

Debt - Liquid Fund

Open ended

5,000.00

  JM Liquid Fund(WD)

Debt - Liquid Fund

Open ended

5,000.00

  JM Liquid Fund(G)

Debt - Liquid Fund

Open ended

5,000.00

  JM Liquid Fund(QD)

Debt - Liquid Fund

Open ended

5,000.00

  Principal Cash Management Fund(DD)

Debt - Liquid Fund

Open ended

5,000.00

  Principal Cash Management Fund(G)

Debt - Liquid Fund

Open ended

5,000.00

  Principal Cash Management Fund(MD)

Debt - Liquid Fund

Open ended

5,000.00

  Principal Cash Management Fund(WD)

Debt - Liquid Fund

Open ended

5,000.00

  IIFL Liquid Fund-Reg(G)

Debt - Liquid Fund

Open ended

5,000.00

  IIFL Liquid Fund-Reg(DD)

Debt - Liquid Fund

Open ended

5,000.00

  Quantum Liquid Fund-Reg(DD)

Debt - Liquid Fund

Open ended

1,00,000.00

  Quantum Liquid Fund-Reg(G)

Debt - Liquid Fund

Open ended

5,000.00

  Quantum Liquid Fund-Reg(MD)

Debt - Liquid Fund

Open ended

10,000.00

  IIFL Liquid Fund-Reg(WD)

Debt - Liquid Fund

Open ended

5,000.00

  IIFL Liquid Fund-Reg(WDR)

Debt - Liquid Fund

Open ended

5,000.00

  Parag Parikh Liquid Fund-Reg(G)

Debt - Liquid Fund

Open ended

5,000.00

  Parag Parikh Liquid Fund-Reg(DD)

Debt - Liquid Fund

Open ended

5,000.00

  Parag Parikh Liquid Fund-Reg(WD)

Debt - Liquid Fund

Open ended

5,000.00

  Parag Parikh Liquid Fund-Reg(MD)

Debt - Liquid Fund

Open ended

5,000.00

  Motilal Oswal Liquid Fund-Reg(G)

Debt - Liquid Fund

Open ended

1,000.00

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