Best Liquid Mutual Funds

The below table shows a list Of the Best Liquid Mutual Funds Based on AUM, NAV and minimum SIP.

Introduction To Best Liquid Mutual Funds

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 11 years and 8 months, having been launched on 01/01/2013.

SBI Liquid Fund Direct Plan-Growth as a liquid mutual fund, manages assets valued at ₹68,877.19 crores. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 5.27%. This fund has an exit load of 0.007% and an expense ratio of 0.19%. According to SEBI, it falls under the Very High-risk category. The fund’s asset allocation consists of 0% Equity, 108.04% Debt, and -8.04% Other.

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 11 years and 8 months, having been launched on 01/01/2013.

HDFC Liquid Direct Plan-Growth as a liquid mutual fund, manages assets valued at ₹52,666.38 crores. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 5.25%. This fund has an exit load of 0.007% and an expense ratio of 0.2%. According to SEBI, it falls under the Very High-risk category. The fund’s asset allocation consists of 0% equity, 107.88% debt and -7.89% other.

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 11 years and 8 months, having been launched on 01/01/2013.

Aditya Birla Sun Life Liquid Fund Direct-Growth as a liquid mutual fund, manages assets valued at ₹51,273.51 crores. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 5.36%. This fund has an exit load of 0.007% and an expense ratio of 0.21%. According to SEBI, it falls under the Very High-risk category. The fund’s asset allocation is as follows: No Equity, 88.47% in Debt and 11.53% in Other.

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 11 years and 8 months, having been launched on 01/01/2013.

ICICI Prudential Liquid Fund Direct Plan-Growth as a liquid mutual fund, manages assets valued at ₹50.077.69 crores. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 5.31%. This fund has an exit load of 0.007% and an expense ratio of 0.2%. According to SEBI, it falls under the Very High-risk category. The fund’s asset allocation is as follows: No Equity, 97.48% Debt and 2.52% Other.

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 11 years and 8 months, having been launched on 01/01/2013.

Kotak Liquid Direct – Growth as a liquid mutual fund, manages assets valued at ₹37.470.75 crores. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 5.26%. This fund has an exit load of 0.007% and an expense ratio of 0.2%. According to SEBI, it falls under the Very High-risk category. The fund’s asset allocation consists of 0% equity, 104.49% in debt and -4.49% in other investments.

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 11 years and 8 months, having been launched on 01/01/2013.

Nippon India Liquid Fund Direct-Growth as a liquid mutual fund, manages assets valued at ₹32.733.81 crores. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 5.33%. This fund has an exit load of 0.007% and an expense ratio of 0.2%. According to SEBI, it falls under the Very High-risk category. The fund’s asset allocation is as follows: No Equity, 101.34% Debt and (-1.34)% Other.

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 11 years and 8 months, having been launched on 01/01/2013.

Axis Liquid Direct Fund-Growth as a liquid mutual fund, manages assets valued at ₹27,339.16 crores. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 5.33%. This fund has an exit load of 0.007% and an expense ratio of 0.15%. According to SEBI, it falls under the Very High-risk category. The fund’s asset allocation includes 0% in Equity, 102.83% in Debt, and -2.84% in Other.

UTI Liquid Fund

UTI Liquid Direct-Growth is a Liquid mutual fund scheme from UTI Mutual Fund. This fund has been in existence for 11 years and 8 months, having been launched on 01/01/2013.

UTI Liquid Direct-Growth as a liquid mutual fund, manages assets valued at ₹26,4266.30 crores. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 5.31%. This fund has an exit load of 0.007% and an expense ratio of 0.18%. According to SEBI, it falls under the Very High-risk category. The fund’s asset allocation consists of No Equity, 92.94% Debt and 7.06% Other.

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 11 years and 8 months, having been launched on 01/01/2013.

Tata Liquid Fund Direct-Growth as a liquid mutual fund, manages assets valued at ₹22,261.95 crores. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 5.31%. This fund has an exit load of 0.007% and an expense ratio of 6.03%. According to SEBI, it falls under the Very High-risk category. The fund’s asset allocation is as follows: No Equity, 98.08% Debt, and 1.92% Other.

HSBC Liquid Fund

HSBC Liquid Fund Direct-Growth is a Liquid mutual fund scheme from HSBC Mutual Fund. This fund has been in existence for 11 years and 8 months, having been launched on 01/01/2013.

HSBC Liquid Fund Direct-Growth as a liquid mutual fund, manages assets valued at ₹17,291.07 crores. Over the past 5 years, it has achieved a Compound Annual Growth Rate (CAGR) of 5.29%. This fund has an exit load of 0.007% and an expense ratio of 0.21%. According to SEBI, it falls under the Very High-risk category. The fund’s asset allocation comprises No Equity, Debt  98.63% and Other  1.37%.

Liquid Mutual Funds Meaning

Liquid mutual funds are a type of debt fund that invests in short-term money market instruments such as treasury bills, commercial papers and certificates of deposit. These funds aim to provide high liquidity, ensuring quick access to cash for investors.

They are considered low-risk investments due to their focus on safe, short-term securities. Liquid mutual funds offer relatively stable returns, making them suitable for investors looking to park surplus funds temporarily without worrying about significant market volatility or capital loss.

Investors can redeem their liquid mutual fund units quickly, typically within 24 hours, without any exit load. This makes them ideal for short-term financial goals or emergencies, providing convenience and flexibility while maintaining capital security.

Features Of The Top Liquid Mutual Funds

The main features of top liquid mutual funds include high liquidity, minimal risk, low expense ratios and short-term investment options. These funds primarily invest in money market instruments, making them suitable for parking surplus funds with low volatility and quick access to cash.

• High Liquidity: Liquid mutual funds allow quick redemption, typically processed within 24 hours, providing easy access to funds for short-term needs without a significant impact on the principal amount.
• Minimal Risk: These funds invest in low-risk money market instruments like treasury bills and commercial papers, offering stable returns with very low chances of capital loss.
• Low Expense Ratios: Top liquid funds come with low management fees, ensuring more of the returns are passed on to investors, making them cost-effective for short-term parking of funds.
• Short-Term Investment Options: Liquid mutual funds are ideal for short-term investments, as they offer flexibility for holding periods from a few days to a few months, catering to investors seeking short-term financial solutions.

Best Performing Liquid Mutual Funds India

The table below shows the Best-performing Liquid Mutual Funds Based on the highest to lowest expense ratio.

Top Performing Liquid Mutual Funds

The table below shows the Best Liquid Mutual Funds Based on the Highest 3Y CAGR.

List Of Top Performing Liquid Mutual Funds

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.

Liquid Mutual Funds Returns

The table below shows Liquid Mutual Funds Returns Based on 1Y return

Historical Performance Of Liquid Mutual Funds In India

The table below shows Historical Performance Of Liquid Mutual Funds based on 5Y return

Factors To Consider When Investing In Best Liquid Mutual Funds

The main factors to consider when investing in the best liquid mutual funds include liquidity, portfolio quality, expense ratio and fund performance. These factors ensure that the chosen liquid fund aligns with your short-term financial goals and provides stability and returns.

• Liquidity: Ensure the liquid mutual fund offers quick redemption without significant delays, usually within 24 hours. High liquidity is essential to access funds immediately for short-term financial needs or emergencies.
• Portfolio Quality: Check the portfolio of the fund to ensure it consists of high-quality money market instruments like treasury bills and certificates of deposit, which minimize risk and provide stability.
• Expense Ratio: Evaluate the expense ratio, as it directly impacts your returns. Funds with a lower expense ratio are more cost-effective, allowing you to retain a higher portion of the earned returns.
• Fund Performance: Review the historical performance of the fund to assess its consistency in delivering stable returns. Although past performance doesn’t guarantee future results, it provides insights into the fund’s management and risk management capabilities.

How To Invest In Liquid Mutual Funds?

To invest in the best-performing liquid mutual funds in India, start by analyzing funds based on liquidity, portfolio quality, expense ratio and historical performance. Compare different funds to ensure they match your short-term financial needs and risk tolerance.

Once you’ve selected a liquid fund, you can invest through Alice Blue, an online investment platform known for its simplicity and reliability. They offer a seamless process to invest in various liquid funds, with easy tracking and management features for your portfolio.

For convenience and flexibility, a one-time lump sum investment or systematic transfer plan (STP) is recommended. This approach allows you to park your surplus funds efficiently, providing immediate access when needed, while earning steady returns.

Impact Of Market Trends On Liquid Mutual Funds

Market trends have a limited impact on liquid mutual funds because they primarily invest in short-term, low-risk instruments like treasury bills and commercial papers. These funds are less affected by market volatility, providing relatively stable returns even during economic fluctuations.

However, interest rate changes can influence liquid mutual fund performance. Rising interest rates may increase yields on new short-term securities, slightly improving returns, while falling rates might reduce yields. Despite this, the overall impact remains minimal compared to equity-based funds, ensuring liquidity and stability.

How Liquid Mutual Funds Perform In Volatile Markets?

In volatile markets, liquid mutual funds tend to perform steadily due to their investment in short-term, low-risk securities like treasury bills and commercial papers. These funds are less impacted by market fluctuations, offering stability and minimal capital risk to investors.

While equity markets may experience significant swings, liquid funds remain relatively insulated. However, changes in interest rates can have a mild effect on returns. Overall, their conservative nature ensures liquidity and capital preservation, making them a safer option during market volatility.

Advantages Of Investing In Liquid Mutual Funds

The main advantages of investing in liquid mutual funds include high liquidity, low risk, flexibility in investments and better returns than savings accounts. These funds provide a safe and efficient way to park surplus funds with quick access to capital when needed.

• High Liquidity: Liquid mutual funds allow investors to redeem their money quickly, usually within 24 hours, offering immediate access to funds for emergencies or short-term needs without significant delays or penalties.
• Low Risk: These funds invest in short-term, low-risk securities like treasury bills and certificates of deposit, ensuring minimal exposure to market volatility while maintaining capital preservation and stability.
• Flexibility in Investments: Investors can choose between lump sum or systematic investment plans (SIPs) based on their financial goals, providing flexibility to adjust investments over time according to changing needs and market conditions.
• Better Returns than Savings Accounts: Liquid mutual funds typically offer higher returns compared to traditional savings accounts, making them an attractive option for short-term investments while still ensuring safety and ease of access to funds.

Risks Of Investing In Liquid Mutual Funds

The main risks of investing in liquid mutual funds include interest rate risk, credit risk, reinvestment risk and lower returns during economic downturns. Although considered safe, these risks can slightly impact the performance and returns of liquid funds under certain market conditions.

• Interest Rate Risk: Fluctuations in interest rates can affect the yield of liquid mutual funds. When interest rates rise, the value of existing securities may drop, slightly reducing the returns on the fund.
• Credit Risk: Liquid funds invest in instruments issued by corporations or financial institutions, which may default on payments. Although rare, credit risk still exists if the issuer fails to meet its obligations, affecting fund returns.
• Reinvestment Risk: Short-term securities held by liquid funds may mature quickly, requiring reinvestment. If prevailing interest rates are lower than previous ones, this can reduce the potential returns from newly reinvested securities.
• Lower Returns During Economic Downturns: In times of economic downturns, liquid mutual funds may offer lower returns compared to other investments. While they provide stability, their yield can decrease when interest rates are lowered to stimulate the economy.

Contribution Of Liquid Mutual Funds To Portfolio Diversification

Liquid mutual funds contribute to portfolio diversification by providing a low-risk option that balances more volatile investments like equities. They offer stability and quick access to cash, reducing overall portfolio risk while maintaining liquidity for short-term financial needs.

By including liquid mutual funds, investors can park surplus funds and mitigate market volatility’s impact on their portfolio. This diversification strategy ensures a safety net in case other investments underperform, helping to preserve capital and achieve steady returns during uncertain market conditions.

Who Should Invest In Liquid Mutual Funds?

Investors who need quick access to their funds for short-term goals or emergencies should consider liquid mutual funds. They offer high liquidity and low risk, making them suitable for parking surplus cash while maintaining easy access to capital.

Additionally, those looking for a safer alternative to traditional savings accounts with slightly better returns may find liquid mutual funds appealing. They are ideal for conservative investors seeking to preserve capital and avoid market volatility while earning modest, stable returns.

Liquid Mutual Funds Taxation

Liquid mutual funds are taxed based on the holding period. Short-term capital gains (for holdings of less than three years) are taxed at the investor’s applicable income tax slab rate, while long-term capital gains are generally tax-free.

Dividends received from liquid mutual funds are taxed according to the investor’s income tax slab. It’s advisable to consult with a tax advisor to understand the tax implications specific to your situation and any recent changes in tax regulations.

Impact Of Fund Manager Expertise On Liquid Mutual Funds’ Performance

The expertise of a fund manager significantly impacts the performance of liquid mutual funds. An experienced manager can skillfully navigate interest rate changes and credit risks, ensuring optimal investment in high-quality short-term instruments, which enhances fund stability and returns.

A skilled fund manager also contributes to effective liquidity management, balancing cash flow and investment opportunities. Their expertise in selecting low-risk securities and managing portfolio duration helps maintain consistent returns and safeguard capital, even during fluctuating market conditions.

FAQs – Best Liquid Mutual Funds 

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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.