The below table shows a list of the Best Liquid Mutual Funds Based on AUM, NAV, and minimum SIP.
| Name | AUM (Cr) | NAV (Rs) | Minimum SIP (Rs) |
| HDFC Liquid Fund | 72,211.76 | 5,068.33 | 1000 |
| SBI Liquid Fund | 66,778.13 | 4,036.79 | 500 |
| Aditya Birla SL Liquid Fund | 57,091.44 | 416.68 | 100 |
| ICICI Pru Liquid Fund | 55,112.40 | 382.03 | 99 |
| Axis Liquid Fund | 42,866.63 | 2,869.43 | 1000 |
| Kotak Liquid Fund | 38,144.21 | 5,213.76 | 100 |
| Nippon India Liquid Fund | 33,917.18 | 6,315.84 | 100 |
| Tata Liquid Fund | 25,965.16 | 4,072.90 | 500 |
| UTI Liquid Fund | 24,805.07 | 4,230.38 | 2500 |
| DSP Liquidity Fund | 22,386.69 | 3,690.34 | 100 |
Table of Contents
Introduction to Best Liquid Funds
HDFC Liquid Fund
HDFC Liquid Direct Plan-Growth is a Liquid mutual fund scheme from Hdfc Mutual Fund. This fund has been in existence for 12 years 2 months, having been launched on 01/01/2013.
HDFC Liquid Fund falls under the Liquid Fund category with an AUM of ₹72,211.76 crores, a 5-year CAGR of 5.42%, an exit load of 0.01, and an expense ratio of 0.2%. The SEBI risk category is Moderately Low.
The fund’s asset allocation comprises: No Equity, Debt – 109.29%, and Other – (-9.29)%.
SBI Liquid Fund
SBI Liquid Fund Direct Plan-Growth is a Liquid mutual fund scheme from SBI Mutual Fund. This fund has been in existence for 12 years 2 months, having been launched on 01/01/2013.
SBI Liquid Fund falls under the Liquid Fund category with an AUM of ₹66,778.13 crores, a 5-year CAGR of 5.44%, an exit load of 0.01, and an expense ratio of 0.21%. The SEBI risk category is Moderately Low.
The fund’s asset allocation comprises No Equity, Debt – 102.01%, and Other – (-2.01)%.
Aditya Birla SL Liquid Fund
Aditya Birla Sun Life Liquid Fund Direct-Growth is a Liquid mutual fund scheme from Aditya Birla Sun Life Mutual Fund. This fund has been in existence for 12 years and 2 months, having been launched on 01/01/2013.
Aditya Birla SL Liquid Fund falls under the Liquid Fund category with an AUM of ₹57,091.44 crores, a 5-year CAGR of 5.53%, an exit load of 0.01, and an expense ratio of 0.21%. The SEBI risk category is Moderate.
The fund’s asset allocation comprises: No Equity, Debt – 96.03%, and Other – 3.97%.
ICICI Pru Liquid Fund
ICICI Prudential Liquid Fund Direct Plan-Growth is a Liquid mutual fund scheme from Icici Prudential Mutual Fund. This fund has been in existence for 12 years and 2 months, having been launched on 01/01/2013.
ICICI Pru Liquid Fund falls under the Liquid Fund category with an AUM of ₹55,112.40 crores, a 5-year CAGR of 5.48%, an exit load of 0.01, and an expense ratio of 0.2%. The SEBI risk category is Moderately Low.
The fund’s asset allocation comprises: No Equity, Debt – 99.6%, and Other – 0.4%.
Axis Liquid Fund
Axis Liquid Direct Fund-Growth is a Liquid mutual fund scheme from Axis Mutual Fund. This fund has been in existence for 12 years and 2 months, having been launched on 01/01/2013.
Axis Liquid Fund falls under the Liquid Fund category with an AUM of ₹42,866.63 crores, a 5-year CAGR of 5.5%, an exit load of 0.01, and an expense ratio of 0.09%. The SEBI risk category is Moderately Low.
The fund’s asset allocation comprises: No Equity, Debt – 99.84%, and Other – 0.16%.
Kotak Liquid Fund
Kotak Liquid Direct – Growth is a Liquid mutual fund scheme from Kotak Mahindra Mutual Fund. This fund has been in existence for 12 years and 2 months, having been launched on 01/01/2013.
Kotak Liquid Fund falls under the Liquid Fund category with an AUM of ₹38,144.21 crores, a 5-year CAGR of 5.43%, an exit load of 0.01, and an expense ratio of 0.2%. The SEBI risk category is Moderately Low.
The fund’s asset allocation comprises: No Equity, Debt – 104.11%, and Other – (-4.11)%.
Nippon India Liquid Fund
Nippon India Liquid Fund Direct-Growth is a Liquid mutual fund scheme from Nippon India Mutual Fund. This fund has been in existence for 12 years and 2 months, having been launched on 01/01/2013.
Nippon India Liquid Fund falls under the Liquid Fund category with an AUM of ₹33,917.18 crores, a 5-year CAGR of 5.49%, an exit load of 0.01, and an expense ratio of 0.2%. The SEBI risk category is Moderate.
The fund’s asset allocation comprises: No Equity, Debt – 99.61%, and Other – 0.39%.
Tata Liquid Fund
Tata Liquid Fund Direct-Growth is a Liquid mutual fund scheme from Tata Mutual Fund. This fund has been in existence for 12 years and 2 months, having been launched on 01/01/2013.
Tata Liquid Fund falls under the Liquid Fund category with an AUM of ₹25,965.16 crores, a 5-year CAGR of 5.49%, an exit load of 0.01, and an expense ratio of 0.21%. The SEBI risk category is Moderately Low.
The fund’s asset allocation comprises No Equity, Debt – 102.66%, and Other – (-2.66)%.
UTI Liquid Fund
UTI Liquid Direct-Growth is a Liquid mutual fund scheme from Uti Mutual Fund. This fund has been in existence for 12 years and 2 months, having been launched on 01/01/2013.
UTI Liquid Fund falls under the Liquid Fund category with an AUM of ₹24,805.07 crores, a 5-year CAGR of 5.48%, an exit load of 0.01, and an expense ratio of 0.16%. The SEBI risk category is Moderate.
The fund’s asset allocation comprises: No Equity, Debt – 107.98%, and Other – (-7.98)%.
DSP Liquidity Fund
DSP Liquidity Direct-Growth is a Liquid mutual fund scheme from DSP Mutual Fund. This fund has been in existence for 12 years and 2 months, having been launched on 01/01/2013.
DSP Liquidity Fund falls under the Liquid Fund category with an AUM of ₹22,386.69 crores, a 5-year CAGR of 5.47%, an exit load of 0.01, and an expense ratio of 0.1%. The SEBI risk category is Moderately Low.
The fund’s asset allocation comprises: No Equity, Debt – 95.98%, and Other – 4.02%.
Liquid Funds Meaning
Liquid funds are a type of debt mutual fund that invests in short-term financial instruments like treasury bills, certificates of deposit, and commercial papers. They provide high liquidity and low-risk investment options, making them suitable for short-term goals.
These funds typically have a maturity period of up to 91 days, ensuring quick access to funds. Investors can redeem their investments almost instantly, usually within 24 hours, making liquid funds a preferred choice for parking idle cash with minimal risk.
Liquid funds offer better returns than traditional savings accounts while maintaining safety. However, the returns are not guaranteed, and they can fluctuate based on market conditions, though the risk remains relatively low compared to other mutual funds.
Features of Best Liquid Funds India
The main features of the best liquid funds in India include high liquidity, low risk, competitive returns, and minimal lock-in periods. These funds are ideal for short-term financial goals and provide easy access to money when needed without compromising on returns.
- High Liquidity: Liquid funds allow investors to access their money within 24 hours, making them suitable for emergency funds or short-term goals. Their easy redemption process ensures that investors can quickly withdraw their money without any hassles.
- Low Risk: Liquid funds invest in short-term, low-risk securities like treasury bills and certificates of deposit. These investments provide stability and reduce the risk of capital loss, making them safer compared to other mutual fund types.
- Competitive Returns: Though the returns in liquid funds are not guaranteed, they usually outperform savings accounts and fixed deposits over short durations. Investors can benefit from higher returns without compromising much on safety or liquidity.
- Minimal Lock-in Period: There is no lock-in period for liquid funds, allowing for easy withdrawal at any time. This flexibility makes them a popular choice for those who need regular access to their money or want to park surplus funds temporarily.
Top Liquid Funds Based on Expense Ratio
The table below shows the Best-performing Liquid Mutual Funds Based on the highest to lowest expense ratio.
| Name | Expense Ratio (%) | Minimum SIP (Rs) |
| SBI Liquid Fund | 0.21 | 500 |
| Aditya Birla SL Liquid Fund | 0.21 | 100 |
| Tata Liquid Fund | 0.21 | 500 |
| HDFC Liquid Fund | 0.2 | 1000 |
| ICICI Pru Liquid Fund | 0.2 | 99 |
| Kotak Liquid Fund | 0.2 | 100 |
| Nippon India Liquid Fund | 0.2 | 100 |
| Baroda BNP Paribas Liquid Fund | 0.17 | 500 |
| UTI Liquid Fund | 0.16 | 2500 |
| LIC MF Liquid Fund | 0.16 | 200 |
Top Liquid Mutual Funds In India Based on 3Y CAGR
The table below shows the Top Liquid Mutual Funds Based on the Highest 3Y CAGR.
| Name | CAGR 3Y (Cr) | Minimum SIP (Rs) |
| Aditya Birla SL Liquid Fund | 6.77 | 100 |
| Sundaram Liquid Fund | 6.75 | 1000 |
| Axis Liquid Fund | 6.75 | 1000 |
| Edelweiss Liquid Fund | 6.75 | 100 |
| Baroda BNP Paribas Liquid Fund | 6.74 | 500 |
| Mirae Asset Liquid Fund | 6.74 | 99 |
| HSBC Liquid Fund | 6.73 | 1000 |
| Nippon India Liquid Fund | 6.72 | 100 |
| UTI Liquid Fund | 6.72 | 2500 |
| Canara Rob Liquid Fund | 6.72 | 1000 |
Best Liquid Funds In India To Invest Based on Exit Load
The table below shows Best Performing Liquid Mutual Funds In India Based on Exit Load, i.e., the fee that the AMC charges investors when they exit or redeem their fund units.
| Name | AMC | Exit Load (%) |
| Aditya Birla SL Liquid Fund | Aditya Birla Sun Life AMC Limited | 0.01 |
| Axis Liquid Fund | Axis Asset Management Company Ltd. | 0.01 |
| Bandhan Liquid Fund | Bandhan AMC Limited | 0.01 |
| Baroda BNP Paribas Liquid Fund | Baroda BNP Paribas Asset Management India Pvt. Ltd. | 0.01 |
| Canara Rob Liquid Fund | Canara Robeco Asset Management Company Limited | 0.01 |
| DSP Liquidity Fund | DSP Investment Managers Private Limited | 0.01 |
| Edelweiss Liquid Fund | Edelweiss Asset Management Limited | 0.01 |
| HDFC Liquid Fund | HDFC Asset Management Company Limited | 0.01 |
| HSBC Liquid Fund | HSBC Global Asset Management (India) Private Limited | 0.01 |
| ICICI Pru Liquid Fund | ICICI Prudential Asset Management Company Limited | 0.01 |
Liquid Fund Returns In India
The table below shows Liquid Mutual Funds Returns Based on 1Y return
| Name | Absolute Returns – 1Y (%) | Minimum SIP (Rs) |
| Edelweiss Liquid Fund | 7.41 | 100 |
| Sundaram Liquid Fund | 7.41 | 1000 |
| Aditya Birla SL Liquid Fund | 7.39 | 100 |
| Axis Liquid Fund | 7.38 | 1000 |
| DSP Liquidity Fund | 7.38 | 100 |
| Mirae Asset Liquid Fund | 7.36 | 99 |
| Canara Rob Liquid Fund | 7.35 | 1000 |
| HSBC Liquid Fund | 7.35 | 1000 |
| ICICI Pru Liquid Fund | 7.35 | 99 |
| Nippon India Liquid Fund | 7.35 | 100 |
Historical Performance of Top Liquid Funds India
The table below shows the Historical Performance Of Liquid Mutual Funds based on 5Y return
| Name | CAGR 5Y (Cr) | Minimum SIP (Rs) |
| Edelweiss Liquid Fund | 5.53 | 100 |
| Aditya Birla SL Liquid Fund | 5.53 | 100 |
| Axis Liquid Fund | 5.5 | 1000 |
| Mirae Asset Liquid Fund | 5.49 | 99 |
| Nippon India Liquid Fund | 5.49 | 100 |
| Tata Liquid Fund | 5.49 | 500 |
| Baroda BNP Paribas Liquid Fund | 5.49 | 500 |
| LIC MF Liquid Fund | 5.49 | 200 |
| ICICI Pru Liquid Fund | 5.48 | 99 |
| UTI Liquid Fund | 5.48 | 2500 |
Factors to Consider When Investing in Liquid Mutual Funds
The main factors to consider when investing in liquid mutual funds include safety, liquidity, returns, and expense ratio. These funds are ideal for short-term parking of funds, but investors should carefully evaluate key factors to maximize returns and minimize risks.
- Safety: Liquid funds generally invest in high-quality, short-term debt securities. However, the risk of default or interest rate fluctuations still exists. Investors should assess the fund’s credit quality and diversification to ensure the safety of their capital.
- Liquidity: Liquid mutual funds offer high liquidity, typically allowing redemptions within 24 hours. This feature makes them attractive for short-term goals. However, investors should be mindful of exit loads or redemption conditions that may affect withdrawal flexibility.
- Returns: While liquid funds provide moderate returns compared to other investments, the focus is more on stability than high returns. Investors should compare past performance and consistency before making a decision, keeping in mind that returns are market-dependent.
- Expense Ratio: The expense ratio is the cost charged by the mutual fund for managing the investments. A higher expense ratio can eat into returns, so investors should opt for funds with a lower ratio to maximize net gains.
How to Invest in Top Liquid Mutual Funds?
To invest in top liquid mutual funds, begin by researching and comparing funds based on factors like safety, returns, and expense ratio. Evaluate fund performance, past returns, and credit ratings before selecting the one that best suits your financial goals.
You can invest through a brokerage platform like Alice Blue, which offers easy access to top mutual funds. The platform provides detailed insights, allowing investors to compare different funds, manage their portfolios, and make informed decisions with minimal effort.
Once you’ve chosen a fund, complete the investment process by creating an account on Alice Blue, selecting the mutual fund, and following the steps to complete the transaction. Regularly monitor your investments to track performance and adjust as needed.
Impact of Market Trends on Liquid Funds India
Market trends can significantly impact liquid funds in India, especially through changes in interest rates and liquidity conditions. When interest rates rise, the returns on liquid funds may increase, but sudden market volatility can affect short-term yields and performance.
During periods of market stability, liquid funds tend to provide consistent, low-risk returns as they invest in high-quality short-term securities. However, in times of economic uncertainty or liquidity crunch, the performance of these funds may be affected, albeit less severely than equity funds.
The impact of monetary policy, such as changes in repo rates by the Reserve Bank of India (RBI), also influences liquid fund returns. A tightening monetary policy might reduce liquidity, leading to lower returns, while easing policies can boost fund performance.
How Liquid Funds Perform in Volatile Markets?
In volatile markets, liquid funds typically perform more stably compared to equity or long-term debt funds. Since they invest in short-term, high-quality debt securities, their exposure to market fluctuations is minimal, offering a safe haven for conservative investors.
However, even liquid funds aren’t entirely immune to volatility. Sudden liquidity shortages or interest rate changes may slightly impact returns. During sharp market swings, redemptions can increase, potentially leading to minor fluctuations in fund performance.
Despite these risks, liquid funds remain a popular choice during market volatility due to their low risk and high liquidity. Investors often use them as a temporary parking option during uncertain times, providing both flexibility and security.
Advantages of Investing in Liquid Mutual Funds
The main advantages of investing in liquid mutual funds include easy liquidity, lower risk, flexibility, and moderate returns. These funds are ideal for parking surplus funds for short durations, offering better returns than savings accounts while maintaining high accessibility.
- Liquidity: Liquid funds allow easy withdrawal of investments, typically within 24 hours. This makes them ideal for individuals seeking a flexible investment option that provides quick access to their funds without long lock-in periods or hefty penalties.
- Lower Risk: These funds invest in short-term, high-quality debt instruments like treasury bills and commercial papers. Their exposure to interest rate changes and market volatility is minimal, providing a safer investment alternative compared to equities or long-term debt funds.
- Flexibility: Liquid funds offer flexible investment options, allowing investors to add or withdraw money without significant restrictions. This flexibility is beneficial for managing cash flow or setting aside funds for short-term financial goals or emergency needs.
- Moderate Returns: While liquid funds don’t offer high returns, they generally provide better interest than traditional savings accounts. The returns are stable, making them suitable for short-term investments where capital preservation is prioritized over aggressive growth.
Risks of Investing in Liquid Mutual Funds
The main risks of investing in liquid mutual funds include credit risk, interest rate risk, liquidity risk, and reinvestment risk. While these funds are relatively safe, investors should be aware of potential challenges that could affect returns or capital preservation.
- Credit Risk: Liquid funds invest in debt securities, and there’s a possibility of default by the issuer. If the creditworthiness of an issuer declines, the fund’s returns can be negatively impacted, leading to potential losses for the investor.
- Interest Rate Risk: Changes in interest rates affect liquid fund returns. When interest rates rise, the value of existing securities may fall, leading to lower returns. However, this risk is generally lower in liquid funds compared to long-term debt funds.
- Liquidity Risk: In rare cases, liquid funds may face liquidity issues, especially during financial crises or market disruptions. If the fund manager cannot sell securities promptly, it might delay redemptions or impact the fund’s performance.
- Reinvestment Risk: Liquid funds invest in short-term securities, and reinvestment risk arises when the interest earned from maturing securities needs to be reinvested at a lower rate, which may lead to reduced overall returns for investors.
Contribution of Liquid Funds to Portfolio Diversification
Liquid funds contribute to portfolio diversification by offering a low-risk investment option that balances higher-risk assets like equities. They provide stability and liquidity, ensuring easy access to funds while reducing overall portfolio volatility during uncertain market conditions.
Additionally, liquid funds act as a temporary parking space for surplus cash, allowing investors to capitalize on market opportunities quickly. Their short-term nature, combined with moderate returns, complements a diversified portfolio, helping manage cash flow and minimize risk exposure.
Who Should Invest In Liquid Mutual Funds?
Investors who need high liquidity and low risk should consider liquid mutual funds. They are ideal for those looking to park surplus cash temporarily, manage short-term financial goals, or maintain an emergency fund while earning better returns than savings accounts.
Additionally, liquid mutual funds suit conservative investors seeking stable returns with minimal volatility. They are appropriate for individuals who want to preserve capital and have quick access to their funds without significant exposure to market fluctuations or long-term investment commitments.
Impact of Fund Manager Expertise on Liquid Funds Performance
The expertise of a fund manager significantly impacts the performance of liquid funds. An experienced manager can effectively navigate interest rate changes and credit risks, optimizing the fund’s investment in high-quality, short-term securities to ensure stable returns.
Additionally, a skilled fund manager can enhance liquidity management and minimize risks associated with market volatility. Their ability to make informed decisions and execute timely trades can lead to better fund performance, ensuring that returns remain consistent even in fluctuating market conditions.
Liquid Fund Taxation In India
In India, liquid funds are taxed based on their holding period. Short-term capital gains (STCG) on investments held for less than three years are taxed at 15%, while long-term capital gains (LTCG) are taxed at 20% with indexation benefits if held longer.
Interest income from liquid funds is also taxable as per the investor’s income tax slab. Unlike capital gains, this income is taxed at the individual’s applicable slab rate, impacting overall returns based on the investor’s income bracket.
FAQs – List Of Best Liquid Funds In India
Liquid funds in mutual funds are short-term debt funds that invest primarily in high-quality, low-duration instruments like treasury bills and commercial papers. They offer high liquidity, low risk, and relatively stable returns, ideal for parking surplus cash temporarily.
Top Liquid Mutual Funds #1: HDFC Liquid Fund
Top Liquid Mutual Funds #2: SBI Liquid Fund
Top Liquid Mutual Funds #3: Aditya Birla SL Liquid Fund
Top Liquid Mutual Funds #4: ICICI Pru Liquid Fund
Top Liquid Mutual Funds #5: Axis Liquid Fund
These funds are listed based on the Highest AUM.
The Best Liquid Mutual Funds based on expense ratio include Quant Liquid Plan, Motilal Oswal Liquid Fund, Aditya Birla SL Liquid Fund, Tata Liquid Fund, and HDFC Liquid Fund.
Yes, investing in liquid funds is generally considered safe due to their focus on high-quality, short-term debt instruments. They offer low risk and high liquidity, making them suitable for short-term investments. However, they are not entirely risk-free.
Yes, Systematic Investment Plans (SIPs) are allowed in liquid funds. SIPs enable investors to regularly invest a fixed amount in liquid funds, helping in disciplined investing and leveraging the benefits of rupee cost averaging while maintaining high liquidity.
No, liquid funds are not tax-free. Short-term capital gains are taxed at 15%, while long-term capital gains are taxed at 20% with indexation benefits. Interest income is taxed according to the investor’s income tax slab rate.
The best Liquid mutual funds based on the highest 3Y CAGR include Aditya Birla SL Liquid Fund, Mahindra Manulife Liquid Fund, Baroda BNP Paribas Liquid Fund, Bank of India Liquid Fund, and Quant Liquid Plan.
To invest in Liquid mutual funds in India, research top funds and their performance. Open an account with a brokerage firm with Alice Blue, complete the necessary KYC procedures, and invest through their platform or online portal.
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Disclaimer: The above article is written for educational purposes, and the companies’ data mentioned in the article may change with respect to time The securities quoted are exemplary and are not recommendatory
