7. Top 5 Liquid Funds Based on Returns
3-year Returns (%)* 5-year Returns (%)*
Franklin India Liquid Fund 7.05% 7.18%
Invesco India Liquid Fund 6.79% 7.01%
Tata Liquid Fund 6.87% 7.06%
Mirae Asset Cash Management Fund 6.85% 6.98%

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Keeping this in view, can liquid funds give negative returns?

Liquid fund investors seek daily liquidity, safety of capital and stability in returns. Any fluctuation in returns, particularly on the negative side, may not be acceptable to investors who use liquid funds to park their money for very short periods.

Also Know, what is the benefit of liquid fund? Benefits of liquid funds Lowest Interest Rate Risk – Given that liquid funds mainly invest in fixed income securities which have a short maturity period, they have one of the lowest interest rate risk as compared to other debt funds. Tax Benefits - Liquid Funds offer valuable tax benefits.

Beside above, which liquid fund is best?

List of Best 5 Liquid Funds to Invest in 2020

Fund Name AUM (cr.) 1 Year Returns
Aditya Birla Sun Life Liquid Fund ₹40,835 6.70%
Axis Liquid Fund ₹29,119 6.61%
Nippon India Liquid Fund ₹24,235 6.69%
Franklin India Liquid Fund ₹12,529 6.85%

Is it wise to invest in liquid funds?

Liquid funds are high liquidity open-ended income schemes that invest in debt and money market instruments such as government securities, treasury bills and call money among others. These instruments have a maximum maturity period of 91 days and are considered safe because they mitigate interest rate volatility risk.

Related Question Answers

Is there any risk in liquid funds?

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. A change in the prevailing interest rates may cause a difference in the price of the debt instruments.

Can I lose money in liquid funds?

You can have negative returns in Liquid funds when there is spiking short term interest rates, but if you hold onto your investments for up to 3 months or 90 days you will more or less recover your funds.

Are liquid funds better than fixed deposits?

Liquid fund investors are considered to be in a better position than fixed deposit holders in case of taxation on their respective investments. When it comes to tax on liquid funds, the investors are entitled to avail tax indexation, which directly helps them to lower their burden of tax-related expenses.

Are liquid funds tax free?

Liquid funds held for more than three years are eligible for long term capital gains tax with indexation. If you sell before three years, you have to pay tax as per your tax slab. If you opt for the dividend option, the fund will be subject to a dividend distribution tax of 29.12%.

What is difference between debt fund and liquid fund?

Debt funds refer to the category of mutual funds that invest in a pool of debt oriented or fixed income securities. Each of these securities have different maturity tenures and carry varying degrees of risk. Liquid funds on the other hand are essentially a subset of debt funds.

Which debt fund is safe?

“Unless you are a mature investor, stick with shorter duration funds," said Singhal. If you don't like volatility, stick to low-risk debt funds that invest in higher-rated assets. “Short-term debt funds with a 100% AAA portfolio generate better post-tax returns vis-a-vis other options like bank deposits.

How much liquid funds should I have?

Most financial experts end up suggesting you need a cash stash equal to six months of expenses: If you need $5,000 to survive every month, save $30,000. Personal finance guru Suze Orman advises an eight-month emergency fund because that's about how long it takes the average person to find a job.

Is there any exit load in liquid fund?

As per the new structure, holding for one day in liquid fund would draw an exit load of 0.007 per cent, two-day will have 0.0065 per cent exit load, followed by 0.006 per cent, 0.0055 per cent, 0.0050 per cent, 0.0045 per cent for the third, fourth, fifth and sixth day respectively with exit load from the seventh day

Can I invest in liquid fund on Saturday?

Liquid fund requests can be submitted on Saturday. But the processing of funds will take place on Monday only. To invest your money for the weekend, you need to create a request on Friday before given closing time by the fund house.

Can we do SIP in liquid funds?

Yes, you can invest in Liquid funds through SIP mode. These funds lend to good companies and for a short period of time (Up to 91 days). And, this construct means the risk of making a loss on these funds is nearly zero. These funds lend to good companies and for a short period of time (Up to 91 days).

What is Blue Chip Fund?

A Blue chip fund is a term used to indicate well-established and financially sound companies. Blue chip funds invest in stocks of those companies that have a credible track record with sound financials along with regular dividend payments and profitability over the years.

Can I invest in mutual funds for 10 days?

Can you suggest any mutual fund for very short-term investment of say, 5 to 10 days, without any risk with moderate returns? Yes, there are plenty of funds that suit your requirement. An ultra short-term debt fund or a cash fund (as they are usually called) is the relevant fund for you.

How do I withdraw money from liquid fund?

How can one withdraw from Liquid Fund : This is as simple as breaking your FD. You can place withdrawals request from AMCs or from CAMS/KARVY website. Fund is credited to your linked bank account well within 3 working days. Normally it takes 12–24 hours only.

How do I invest in liquid funds?

To be able to invest in a liquid fund, the investor should have KYC formalities completed with a KYC registration agency. A KYC form needs to be filled up and documents (address and identity proof) should be submitted, with originals for this purpose.

What is the lock in period for liquid funds?

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.

Is Liquid Fund better than FD?

Safest debt funds, Liquid funds have consistently given 1-2% higher returns than FD. The returns difference is even higher if you happen to take money out of FD before its maturity because it will cost you 1% penalty and lesser overall interest rates in FD.

Can I invest lump sum in liquid funds?

Invest the lump sum in a liquid fund. Then start a Systematic Transfer Plan (STP) from the debt fund to the ELSS. Your corpus will not only earn higher returns than a savings bank account but will also allow for systematic investment.

What is average maturity in liquid funds?

Average Maturity: Liquid funds invest in instruments which mature within 91 days. Lower average maturity indicates that the fund is holding more cash, which in turn gives less return. on capital gains.

How much should I invest in liquid fund?

Liquid funds can generate around 6-7% returns in a year, while low duration funds can give 7-9%. Liquid funds invest in securities with 90-day maturity, short-term funds invest in instruments whose maturity can be 1-3 years. I want to invest Rs 10 lakh for 6-12 month.