The term liquid funds refers to funds that invest in fixed income securities such as certificates of deposit, treasury bills, commercial papers, and other debt securities that mature within 91 days.
There is no lock-in period for liquid funds because they are a liquid asset class. Liquid funds offer better liquidity at a lower penalty charge than traditional fixed-term deposits.
If you want to invest in fixed deposits, then you can make sure that the tenure of the deposit ranges from seven days to ten years. A liquid fund's maturity can range from seven days to 91 days.
Best Liquid Funds In India
1. Quant Liquid Plan
Among the various debt funds, Quant Liquid Plan-Growth Option Direct Plan is the most well-known.
As of the 1st of January 2013, the fund has been operating. Sanjeev Sharma, the fund manager, is responsible for its operation.
Sanjeev Sharma provides customers with a safe and secure way to invest their money.
- Performance: Since inception, the Quant Liquid Fund has generated annualized returns of 5.15% and 5.98%. Funds in the Quant Liquid category belong to Quant Mutual Funds.
- AUM (fund size): 519 Cr
- Exit Load: 0.007%
- Lock-in: No Lock-in
- Age: 9 years
- Min Investment: Rs 5,000 is the minimum amount required for investing in Quant Liquid Fund via lump sum and Rs 1,000 is the minimum amount required for investing via SIP.
- Benchmark: 4.14%
- Turnover: 60.35%
- Tax implications: You will pay tax on short-term capital gains (up to three years) based on your income slab.
2. PGIM India Liquid Fund
A debt fund, PGIM India Liquid Fund Direct Plan-Growth is offered.
It was launched on January 1, 2013. Kunal Jain and Ankit Shah manage the fund. Your money is in safe hands with this fund.
- Performance: A total of 93.82% of the fund's assets are invested in debt, of which 18.1% are in government securities, and 75.72% in very low-risk securities.
- AUM (fund size): 603 Cr
- Exit Load: 0.007%
- Lock-in: No Lock-in
- Age: 9 years
- Min Investment: Rs 5,000 is the minimum amount required for investing in Quant Liquid Fund via lump sum and Rs 1,000 is the minimum amount required for investing via SIP
- Benchmark: 4.14%
- Turnover: 962.13%
- Tax implications: You will pay tax on short-term capital gains (up to three years) based on your income slab.
3. Edelweiss Liquid Fund
Direct Growth is a bond fund from Edelweiss Liquid Fund. It was established on January 1, 2013.
Rahul Dedhia and Pranavi Kulkarni manage the fund. Your money will be safe with them.
- Performance: Over the past three years, the Edelweiss Liquid Fund has generated returns of 4.34% and 5.51%, respectively. Edelweiss Liquid Fund is part of Edelweiss Mutual Funds' Debt category.
- AUM (fund size): 1562 Cr
- Exit Load: 0.007%
- Lock-in: No Lock-in
- Age: 9 years
- Min Investment: Rs 5,000 is the minimum amount required for investing in Quant Liquid Fund via lump sum and Rs 1,000 is the minimum amount required for investing via SIP.
- Benchmark: 4.14%
- Turnover: 1000.41%
- Tax implications: You will pay tax on short-term capital gains (up to three years) based on your income slab.
4. Navi liquid fund direct plan growth
A debt fund, Navi Liquid Fund Direct Plan-Growth Option, is available.
In January 2013, the fund was launched. Surbhi Sharma manages the fund. It is suitable for protecting your savings.
- Performance: The fund has 46.09 percent of its assets in debt, including 11.34 percent in government securities and 34.75 percent in very low-risk securities.
- AUM (fund size): 77.05 Cr
- Exit Load: 0.007%
- Lock-in: No Lock-in
- Age: 9 years
- Min Investment: Rs 5,000 is the minimum amount required for investing in Quant Liquid Fund via lump sum and Rs 1,000 is the minimum amount required for investing via SIP.
- Benchmark: 4.14%
- Turnover: 207.95%
- Tax implications: You will pay tax on short-term capital gains (up to three years) based on your income slab.
5. Mahindra Manulife liquid fund direct
Mahindra Manulife Liquid Fund Direct Plan-Growth invests in debt. Founded in July 2016, this fund invests in debt.
Rahul Pal and Amit Garg manage the fund. Your money will be safe in this fund.
- Performance: 96.36% of the fund is invested in debt, which consists of 23.83% government securities, and 72.53% in very low-risk investments.
- AUM (fund size): 1596 Cr
- Exit Load: 0
- Lock-in: No Lock-in
- Age: 7 years
- Min Investment: Rs 5,000 is the minimum amount required for investing in Quant Liquid Fund via lump sum and Rs 1,000 is the minimum amount required for investing via SIP.
- Benchmark: 4.14%
- Turnover: 491.84%
- Tax implications: You will pay tax on short-term capital gains (up to three years) based on your income slab.
6. L&T liquid fund
The direct Plan-Growth Option of the L&T Liquid Fund is a debt fund. In 2013, the fund was established.
Mahesh Chhabria and Shriram Ramanathan manage the fund. Your money is safe in this fund.
- Performance: It has been found that the direct growth returns of L&T Liquid Plan have been 3.50% over the last 1 year. The plan has delivered an average return of 6.82% since its launch.
- AUM (fund size): 4850 Cr
- Exit Load: 0.007%
- Lock-in: No Lock-in
- Age: 9 years
- Min Investment: Rs 5,000 is the minimum amount required for investing in Quant Liquid Fund via lump sum and Rs 1,000 is the minimum amount required for investing via SIP.
- Benchmark: 4.14%
- Turnover: 583.41%
- Tax implications: You will pay tax on short-term capital gains (up to three years) based on your income slab.
7. Invesco India liquid fund
It's a debt fund offered by Invesco India Liquid Fund Direct Plan-Growth.
Launched on 1 January 2013, it was the first debt fund offered by Invesco.
Prateek Jain and Krishna Cheemalapati manage the fund. Your money is in good hands with this fund.
- Performance: 91.12% of the fund's assets are in debt, 29.79% in government securities, and 63.33 percent in very low-risk securities.
- AUM (fund size): 3520.94 Cr
- Exit Load: 0.007%
- Lock-in: No Lock-in
- Age: 9 years
- Min Investment: Rs 5,000 is the minimum amount required for investing in Quant Liquid Fund via lump sum and Rs 1,000 is the minimum amount required for investing via SIP.
- Benchmark: 4.14%
- Turnover: 605.23%
- Tax implications: You will pay tax on short-term capital gains (up to three years) based on your income slab.
8. Canara Robeco liquid fund
Debt funds include Canara Robeco Liquid Direct Plan-Growth. In 2013, this fund was established.
Suman Prasad and Avnish Jain manage the fund. It is a safe investment for your money.
- Performance: A total of 90.75% of the Fund's assets are invested in debt instruments with 26.04 percent invested in government securities, and 64.71 percent in very low-risk securities
- AUM (fund size): 1604 Cr
- Exit Load: 0.007%
- Lock-in: No Lock-in
- Age: 9 years
- Min Investment: Rs 5,000 is the minimum amount required for investing in Quant Liquid Fund via lump sum and Rs 1,000 is the minimum amount required for investing via SIP.
- Benchmark: 4.14%
- Turnover: 1219.19%
- Tax implications: You will pay tax on short-term capital gains (up to three years) based on your income slab.
9. Mirae asset cash management fund
Mirae Asset Cash Management Fund Direct Plan-Growth is a debt fund managed by Mirae Asset Cash Management Group.
This fund was established on January 1, 2013. Abhishek Iyer and Mahendra Jajoo manage the fund.
You can put your money in this fund with confidence.
- Performance: As of the end of the first quarter of 2015, the returns of Mirae Asset Cash Management Fund Direct-Growth were 3.57%. Since the fund was launched, it has generated average annual returns of 6.66%.
- AUM (fund size): 3280 Cr
- Exit Load: 0.007%
- Lock-in: No Lock-in
- Age: 9 years
- Min Investment: Rs 5,000 is the minimum amount required for investing in Quant Liquid Fund via lump sum and Rs 1,000 is the minimum amount required for investing via SIP.
- Benchmark: 4.14%
- Turnover: 580.25%
- Tax implications: You will pay tax on short-term capital gains (up to three years) based on your income slab.
10. Sundaram liquid fund
Sundaram Liquid Fund-Direct Plan-Growth Option is a debt fund that has a direct investment plan.
This fund was established on the 1st of January, 2013.
Sandeep Agarwal, and Dwijendra Srivastava, is responsible for managing the fund.
You can trust this fund to keep your money safe.
- Performance: As of the end of the first quarter of 2015, the return it gave was around 6.92% and is moderate in risk.
- AUM (fund size): 1637 Cr
- Exit Load: 0.007%
- Lock-in: No Lock-in
- Age: 9 years
- Min Investment: Rs 5,000 is the minimum amount required for investing in Quant Liquid Fund via lump sum and Rs 1,000 is the minimum amount required for investing via SIP.
- Benchmark: 4.14%
- Turnover: 7992.79%
- Tax implications: You will pay tax on short-term capital gains (up to three years) based on your income slab.
11. Kotak liquid fund
Kotak Liquid Fund Growth Direct is a debt fund that is managed by Kotak Asset Management.
Kotak Liquid Fund Growth Direct was established on 1 January 2013.
Kotak Liquid Fund Growth Direct is managed by Deepak Agrawal. This fund is one of the safest options to invest in.
- Performance: The Kotak Liquid Fund has delivered average annual returns of 6.8% since its inception in 2009, where the fund is nine years and four months old.
- AUM (fund size): 32283 Cr
- Exit Load: 0.007%
- Lock-in: No Lock-in
- Age: 9 years
- Min Investment: Rs 5,000 is the minimum amount required for investing in Quant Liquid Fund via lump sum and Rs 1,000 is the minimum amount required for investing via SIP.
- Benchmark: 4.14%
- Turnover: 645.24%
- Tax implications: You will pay tax on short-term capital gains (up to three years) based on your income slab.
12. IDFC cash fund
The IDFC Cash Fund - Direct Plan-Growth comes under the category of debt funds.
Since January 1, 2013, the fund has been in operation. Harshal Joshi and Brijesh Shah are in charge of managing the fund.
You can trust that your money is in good hands with this fund.
- Performance: Since its inception, the IDFC Cash Fund has delivered an average annual return of 6.76% and has been around for nine years and four months
- AUM (fund size): 11630 Cr
- Exit Load: 0.007%
- Lock-in: No Lock-in
- Age: 9 years
- Min Investment: Rs 5,000 is the minimum amount required for investing in Quant Liquid Fund via lump sum and Rs 1,000 is the minimum amount required for investing via SIP.
- Benchmark: 4.14%
- Turnover: 56.48%
- Tax implications: You will pay tax on short-term capital gains (up to three years) based on your income slab.
13. Franklin India Liquid fund
The Franklin India Liquid Super Institutional Plan Direct-Growth is a debt fund that specializes in liquid funds.
It was established on 1 January 2013 and since then, it has grown rapidly.
Umesh Sharma, Pallab Roy, and Meena Patel are responsible for the management of the fund.
- Performance: Over the past 1-year, Franklin India Liquid Fund Direct-Growth has achieved a return of 3.53%. The fund has generated returns of 6.95% every year since its launch.
- AUM (fund size): 1465 Cr
- Exit Load: 0.007%
- Lock-in: No Lock-in
- Age: 9 years
- Min Investment: Rs 5,000 is the minimum amount required for investing in Quant Liquid Fund via lump sum and Rs 1,000 is the minimum amount required for investing via SIP.
- Benchmark: 4.14%
- Turnover: 260.95%
- Tax implications: You will pay tax on short-term capital gains (up to three years) based on your income slab.
14. Axis liquid fund
The Axis Liquid Fund Direct Plan-Growth Option is an investment fund for debt. It has been founded on January 1 of 2013.
Aditya Pagaria is the fund manager as well as Devang Shah.
Investing in this fund will help you maintain the safety of your money.
- Performance: There has been a growth of 3.55% in Axis Liquid Direct Fund's returns over the past year. Since its inception, the fund has returned an average of 6.87% per year.
- AUM (fund size): 25465 Cr
- Exit Load: 0.007%
- Lock-in: No Lock-in
- Age: 9 years
- Min Investment: Rs 5,000 is the minimum amount required for investing in Quant Liquid Fund via lump sum and Rs 1,000 is the minimum amount required for investing via SIP.
- Benchmark: 4.14%
- Turnover: 197.26%
- Tax implications: You will pay tax on short-term capital gains (up to three years) based on your income slab.
15. DSP Liquidity fund
Liquidity Fund Direct Plan-Growth is a debt fund offered by DSP. Launched on January 1, 2013, the fund invests in debt securities.
Karan Mundhra, Kedar Karnik is the fund manager of the fund. With this fund, your money will be kept safe and protected.
- Performance: Since its inception, the DSP Liquidity Fund has delivered an average annual return of 6.83%, making it the oldest fund in the DSP group.
- AUM (fund size): 10078 Cr
- Exit Load: 0.007%
- Lock-in: No Lock-in
- Age: 9 years
- Min Investment: Rs 5,000 is the minimum amount required for investing in Quant Liquid Fund via lump sum and Rs 1,000 is the minimum amount required for investing via SIP.
- Benchmark: 4.14%
- Turnover: 685.87%
- Tax implications: You will pay tax on short-term capital gains (up to three years) based on your income slab.
16. Tata liquid fund
Tata Liquid Fund Direct Plan-Growth is a debt fund managed by Tata.
Launched on 1 January 2013, the fund has been performing well. Abhishek Sonthalia and Amit Somani are responsible for managing the fund.
You can rest assured that your money will be safe with this fund.
- Performance: Approximately 100.6% of the fund's assets are invested in debt instruments, of which 37.94% are invested in government securities, and 62.66% are in very low-risk securities.
- AUM (fund size): 10782 Cr
- Exit Load: 0.007%
- Lock-in: No Lock-in
- Age: 9 years
- Min Investment: Rs 5,000 is the minimum amount required for investing in Quant Liquid Fund via lump sum and Rs 1,000 is the minimum amount required for investing via SIP.
- Benchmark: 4.14%
- Turnover: 0%
- Tax implications: You will pay tax on short-term capital gains (up to three years) based on your income slab.
17. UTI Liquid cash fund
This fund is a debt fund under the UTI - Liquid Cash Plan - Direct Plan-Growth Option category.
The fund was launched on the 1st of January, 2013. Mr. Amandeep Chopra and Mr. Amit Sharma manage the fund.
You can be sure your money is well taken care of in this fund.
- Performance: Over the past year, UTI Liquid Cash Direct-Growth has returned 3.57%. Since its launch, the fund has generated an average annual return of 6.83% every year.
- AUM (fund size): 31130 Cr
- Exit Load: 0.007%
- Lock-in: No Lock-in
- Age: 9 years
- Min Investment: Rs 5,000 is the minimum amount required for investing in Quant Liquid Fund via lump sum and Rs 1,000 is the minimum amount required for investing via SIP.
- Benchmark: 4.14%
- Turnover: 144.33%
- Tax implications: You will pay tax on short-term capital gains (up to three years) based on your income slab.
18. BOI AXA Liquid Fund
Liquid Fund Direct Plan-Growth from BOI AXA is a debt fund. This fund has been active since January 1, 2013.
Mithraem Bharucha is responsible for managing the fund.
Your money is going to be safe with Mithraem Bharucha managing the fund.
- Performance: A majority (74.76%) of the fund's assets are invested in debt, of which 13.82% are in government securities and six-tenths (60.94%) in very low-risk securities.
- AUM (fund size): 367 Cr
- Exit Load: 0.007%
- Lock-in: No Lock-in
- Age: 9 years
- Min Investment: Rs 5,000 is the minimum amount required for investing in Quant Liquid Fund via lump sum and Rs 1,000 is the minimum amount required for investing via SIP.
- Benchmark: 4.14%
- Turnover: 622.83%
- Tax implications: You will pay tax on short-term capital gains (up to three years) based on your income slab. The tax rate on long-term capital gains will be 20% with indexation benefit.
19. LIC MF liquid fund
A debt fund such as the Liquid Fund-Direct Plan-Growth Option of LIC MF is a liquid fund.
As of 1 January 2013, this fund was launched. Rahul Singh is the manager of the fund.
Rahul Singh is a good asset manager for your money.
- Performance: It has a growth return of 3.39% over the last year in the LIC MF Liquid Fund. It has delivered an average annual return of 6.90% since its launch.
- AUM (fund size): 5787 Cr
- Exit Load: 0.007%
- Lock-in: No Lock-in
- Age: 9 years
- Min Investment: Rs 5,000 is the minimum amount required for investing in Quant Liquid Fund via lump sum and Rs 1,000 is the minimum amount required for investing via SIP.
- Benchmark: 4.14%
- Turnover: 615.52%
- Tax implications: You will pay tax on short-term capital gains (up to three years) based on your income slab. The tax rate on long-term capital gains will be 20% with indexation benefit. Taxation on dividends will remain the same.
20. Nippon India liquid fund
Nippon India Liquid Fund Direct Plan-Growth Plan is a debt fund that invests in Indian companies.
Nippon India Liquid Fund Direct Plan-Growth Plan has been operating since January 1, 2013.
There are three people managing this fund: Siddharth Deb, Kinjal Desai, and Anju Chhajer. If your money is in this fund, you can be sure that it will be safe.
- Performance: 108.86% of the fund's portfolio contains investments in debt securities, including 30.79% in government securities and 78.07% in funds investing in very low-risk securities
- AUM (fund size): 22232 Cr
- Exit Load: 0.007%
- Lock-in: No Lock-in
- Age: 9 years
- Min Investment: Rs 5,000 is the minimum amount required for investing in Quant Liquid Fund via lump sum and Rs 1,000 is the minimum amount required for investing via SIP.
- Benchmark: 4.14%
- Turnover: 618.95%
- Tax implications: You will pay tax on short-term capital gains (up to three years) based on your income slab. The tax rate on long-term capital gains will be 20% with indexation benefit. Taxation on dividends will remain the same.
Who Should Invest in Liquid Funds
As a matter of fact, the rate of return of liquid funds is much higher than the rate of return of a regular savings account.
It is therefore highly recommended that if you have surplus funds, you should consider parking them in liquid funds and earn a higher return.
Advantages of Liquid Fund
There are a variety of benefits associated with investing in income funds, but the following are the most significant:
- A low-cost investment: As opposed to most other debt funds, liquid funds are not actively managed.
Therefore, if a liquid fund has a low expense ratio, this means that it will also have a higher return on investment.
- A low-risk investment: As mentioned earlier, liquid funds are expected to pose less of a risk compared with investment funds as the underlying securities are expected to mature within 91 days.
As a result, volatility is expected to be reduced.
- Flexibility: As the name suggests, liquid funds are open-ended mutual funds that are held for an extended period of time. As such, you are able to redeem your units whenever you wish.
- Processing time is faster: In general, redemption requests are processed within one working day of receiving them. Funds that are liquid can be redeemed immediately.
Risk of Liquid fund
- As the assets that are invested in the liquid funds mature within 91 days, there is not much volatility in these funds since the assets are maturing within 91 days.
- Due to this, liquid funds (which typically have a higher net asset value (NAV) than comparable classes of debt funds) tend to maintain a relatively stable NAV.
- Due to this fact, this type of mutual fund is often considered suitable for investors who are risk-averse.
Things to consider before investing
- Fund Objectives: Compared to all other types of debt funds, liquid funds are the least risky.
Due to the maturity period of the underlying assets, the NAV does not fluctuate very frequently, ranging from sixty days to ninety days.
- Expected Returns: Over the course of history, liquid funds have delivered returns between 7% and 9%, which are significantly higher than the mere 3.5% provided by a savings account with the local bank.
- Cost: Like all mutual funds, liquid funds have a management fee, which is referred to as the expense ratio, that is charged to manage investments.
It has been mandated by the Securities and Exchange Board of India (SEBI) that the expense ratio must not exceed 2.25 %.
- Investment Horizon: It is only appropriate to invest liquid funds in a short term, say up to a three-month period, when we have surplus cash.
Short horizons like this allow the underlying securities to be exploited to the fullest extent possible.
Investing in ultra-short-term funds can also be a good option if you have a longer investment horizon of up to one year, which provides greater potential returns than longer-term funds.
Taxation on Liquid Funds
- You will be taxed on dividends received from liquid funds, if any, according to your income tax slab.
- Capital gains provided by liquid funds are subject to the same tax rules as debt funds.
- In the event you redeem your investment within three years of the date of allotment, you will earn short-term capital gains.
- Your income tax slab determines how much you are liable to pay on these gains.
Conclusion
The market value of a liquid fund does not respond much when interest rates change on the market since a liquid fund only invests in short-term securities. Therefore, liquid funds are not expected to lose or gain significant amounts of capital.
This was all about best liquid funds. I hope the information was worth reading and all your queries got cleared with the relevant information provided in the article.
For any more queries regarding best liquid funds, you can reply to us with a question in the comment box. We would get back to you with an answer to your query.
frequently asked question
Q1. Which liquid fund gives the best returns?
Axis liquid fund gives best return.
Q2. Which is the safest liquid fund in India?
UTI Liquid cash fund is one of the safest funds that keep your money safe and secure.
Q3. Is Liquid fund better than FD?
Yes, a liquid fund gives a better return than FD and is equally safe to invest in. This makes the liquid funds a much more attractive choice.
Q4. Is liquid fund risk-free?
Yes, liquid funds carry minimum risk and thus can be categorized as risk-free.
