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Liquid Mutual Funds

Finding investment opportunities that offer liquidity must be a priority. Liquidity is the quality of purchasing assets or paying debts quickly without significant losses. You don’t have to wait long to recover your principal when selling an investment. Liquid funds are mutual funds that invest in fixed income and money-market instruments with a credit rating of AA or higher. View More

Liquid funds are ideal for investors with excess cash looking to invest it in short-term assets that provide a better return than a traditional savings account. They function similarly to other liquid debt funds. The main distinction between this and other debt funds is that these deposits are only for a brief period.

The investments may take the form of bonds, government securities, treasury bills, debentures, etc. They are referred to as debt instruments since they function as a form of borrowing for governments, banks, and businesses. When the market values of these securities fluctuate, the liquid fund’s net asset value (NAV) adjusts as well.

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Liquid Mutual Funds List

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logo Canara Robeco Liquid Fund-UR&Dividend-Direct Growth

7.41%

Fund Size (Cr.) - 5,294

Invest
logo Mahindra Manulife Liquid Fund - Direct Growth

7.38%

Fund Size (Cr.) - 1,324

Invest
logo Aditya Birla SL Liquid Fund - Direct Growth

7.38%

Fund Size (Cr.) - 57,091

Invest
logo Union Liquid Fund - Direct Growth

7.35%

Fund Size (Cr.) - 5,170

Invest
logo Edelweiss Liquid Fund - Direct Growth

7.41%

Fund Size (Cr.) - 7,270

Invest
logo AXIS Liquid Fund - Direct Growth

7.37%

Fund Size (Cr.) - 42,867

Invest
logo Bank of India Liquid Fund - Direct Growth

7.34%

Fund Size (Cr.) - 1,741

Invest
logo Sundaram Liquid Fund - Direct Growth

7.40%

Fund Size (Cr.) - 6,619

Invest
logo Baroda BNP Paribas Liquid Fund - Dir Growth

7.32%

Fund Size (Cr.) - 10,429

Invest
logo PGIM India Liquid Fund - Dir Growth

7.36%

Fund Size (Cr.) - 391

Invest
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What are Liquid Mutual Funds?

Liquid mutual funds are debt funds that lend short-term business loans for up to 91 days. Due to their exceptionally short loan tenure, they are the safest funds among all mutual fund types. There is no lock-in period with liquid money. On business days, View More

redemption requests for liquid money are fulfilled within 24 hours.

Overall, assessments of liquid funds are moderate. They are the least dangerous of all debt fund classes, as they typically invest in premium fixed-income securities that expire quickly. Thus, these funds are appropriate for risk-averse investors. Liquid funds’ returns are market-linked so they might provide negative returns. However, this is seldom the case because the best liquid funds invest in low-risk, short-term fixed-income assets.

Liquid funds provide much better returns than traditional savings accounts. With excess funds, it is prudent to put the funds in the best liquid funds or top 5 liquid funds to generate higher returns. Risk-averse investors may also consider investing in top liquid funds because the fund primarily invests in high-quality assets.

Popular Liquid Mutual Funds

  • Min SIP Investment Amt
  • ₹ ₹ 1000
  • AUM (Cr.)
  • ₹ 5,294
  • 3Y Return
  • 6.81%

  • Min SIP Investment Amt
  • ₹ -
  • AUM (Cr.)
  • ₹ 1,324
  • 3Y Return
  • 6.78%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 57,091
  • 3Y Return
  • 6.78%

  • Min SIP Investment Amt
  • ₹ ₹ 500
  • AUM (Cr.)
  • ₹ 5,170
  • 3Y Return
  • 6.76%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 7,270
  • 3Y Return
  • 6.76%

  • Min SIP Investment Amt
  • ₹ ₹ 1000
  • AUM (Cr.)
  • ₹ 42,867
  • 3Y Return
  • 6.76%

  • Min SIP Investment Amt
  • ₹ -
  • AUM (Cr.)
  • ₹ 1,741
  • 3Y Return
  • 6.76%

  • Min SIP Investment Amt
  • ₹ ₹ 1000
  • AUM (Cr.)
  • ₹ 6,619
  • 3Y Return
  • 6.76%

  • Min SIP Investment Amt
  • ₹ ₹ 500
  • AUM (Cr.)
  • ₹ 10,429
  • 3Y Return
  • 6.75%

  • Min SIP Investment Amt
  • ₹ ₹ 1000
  • AUM (Cr.)
  • ₹ 391
  • 3Y Return
  • 6.75%

FAQs

Liquid funds are most suitable for investors with a short-time horizon, who may need liquidity shortly, or have come into some liquidity, which they don’t plan on using for the next few weeks.
Such funds offer an opportunity to keep excess funds or reserves safe while putting them to work to earn moderate rates of returns.

Liquid funds, as a rule of thumb, offer lower market risks when compared to other classes of mutual funds; however, they mostly remain on the same levels when it comes to risks and rewards as against fixed deposits.
While the marginally higher rate of returns, lower minimum investment values, and premature withdrawal penalties have made this an attractive alternative, investors in such funds assume higher risks when compared to fixed deposits at banks.
However, with most liquid funds investing in high-quality credit assets, diverse allocations, and short maturity dates, the risks are still relatively muted for average retail investors.

It had only happened during exceptional circumstances, such as during the 2008 financial crisis, when the Federal Reserve announced that interest rates would go up, resulting in global bond markets going awry overnight.

Given the extensive regulations and standards to which these funds are held, and the superior quality of credit instruments that they invest in, the chances of suffering a loss on your initial capital remain relatively rare.

Install the ET app or visit their website first. Visit the mutual fund’s section. Next, choose and select the Liquid fund you want to invest in. Click on the ‘invest’ option and select the amount you want to invest. After that, provide your KYC details and complete the process.

The most significant appeal of liquid funds is the instant withdrawal facility, allowing investors to take out their funds within just a day after putting them in while earning the interest, however small, for the day’s investment.

Funds that offer this facility allow investors to withdraw up to ₹50,000 almost instantly, with withdrawals processed within 24 hours of placing the request, and beyond this amount, up to 90% of the total investment can be withdrawn at any given time.

Liquid mutual funds deliver higher returns as compared to savings bank accounts. So, if you have some extra funds, you can consider putting them in liquid funds to earn better returns. This type of scheme is also ideal for contingency funds. They primarily focus on capital preservation while generating consistent returns.

Investors can withdraw their units in liquid funds whenever they want. Well-performing liquid funds are therefore perfect for investors willing to save over a short period. Moreover, as the funds primarily invest in high-quality instruments, those with a low-risk appetite can also consider liquid funds for their financial goals.

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