The below table shows a list of the Best Emergency Mutual Funds based on AUM, NAV, and minimum SIP.
| Name | AUM | NAV | Minimum SIP |
| SBI Liquid Fund | 65,452.91 | 3,935.11 | 500 |
| HDFC Liquid Fund | 58,553.96 | 4,940.86 | 100 |
| ICICI Pru Liquid Fund | 46,302.79 | 372.25 | 99 |
| Aditya Birla SL Liquid Fund | 43,796.91 | 406.02 | 100 |
| Kotak Liquid Fund | 32,113.91 | 5,080.75 | 100 |
| Nippon India Liquid Fund | 26,468.93 | 6,156.28 | 100 |
| Axis Liquid Fund | 25,268.68 | 2,796.16 | 1,000 |
| UTI Liquid Fund | 21,108.56 | 4,121.94 | 2,500 |
| Tata Liquid Fund | 19,852.61 | 3,969.37 | 150 |
| HSBC Liquid Fund | 18,418.61 | 2,506.14 | 1,000 |
Table of Contents
Introduction To Best Mutual Fund For Emergency
SBI Liquid Fund
SBI Liquid Fund is managed by SBI Funds Management Limited and primarily invests in short-term debt instruments and money market securities. This fund aims to provide reasonable returns while ensuring liquidity, making it suitable for conservative investors seeking capital preservation.
AUM: ₹65,452.91 Crore
NAV: ₹3,935.11
Minimum SIP: ₹500
Exit Load: 0.01%
Expense Ratio: 0.19%
1-Y Return: 7.43%
5-Y CAGR: 6.23%
SEBI Risk Category: Moderately Low
Minimum Lumpsum Investment: ₹500
HDFC Liquid Fund
HDFC Liquid Fund, managed by HDFC Asset Management Company Limited, focuses on short-term debt securities and money market instruments. It is designed to provide liquidity and generate optimal returns, catering to investors looking for a low-risk investment option.
AUM: ₹58,553.96 Crore
NAV: ₹4,940.86
Minimum SIP: ₹100
Exit Load: 0.01%
Expense Ratio: 0.20%
1-Y Return: 7.43%
5-Y CAGR: 6.23%
SEBI Risk Category: Moderately Low
Minimum Lumpsum Investment: ₹100
ICICI Pru Liquid Fund
Managed by ICICI Prudential Asset Management Company, ICICI Pru Liquid Fund invests in short-term debt instruments and money market securities. This fund aims to offer liquidity and stable returns, making it ideal for investors with a conservative risk appetite.
AUM: ₹46,302.79 Crore
NAV: ₹372.25
Minimum SIP: ₹99
Exit Load: 0.01%
Expense Ratio: 0.20%
1-Y Return: 7.49%
5-Y CAGR: 6.24%
SEBI Risk Category: Moderate
Minimum Lumpsum Investment: ₹99
Aditya Birla SL Liquid Fund
Aditya Birla SL Liquid Fund is managed by Aditya Birla Sun Life Asset Management Company and invests in short-term debt and money market instruments. The fund focuses on providing liquidity and reasonable returns, catering to conservative investors.
AUM: ₹43,796.91 Crore
NAV: ₹406.02
Minimum SIP: ₹100
Exit Load: 0.01%
Expense Ratio: 0.21%
1-Y Return: 7.52%
5-Y CAGR: 6.32%
SEBI Risk Category: Moderate
Minimum Lumpsum Investment: ₹500
Kotak Liquid Fund
Kotak Liquid Fund, managed by Kotak Mahindra Asset Management Company, invests in money market instruments and short-term debt securities. It aims to provide liquidity and stable returns, making it a suitable choice for risk-averse investors seeking capital preservation.
AUM: ₹32,113.91 Crore
NAV: ₹5,080.75
Minimum SIP: ₹100
Exit Load: 0.01%
Expense Ratio: 0.20%
1-Y Return: 7.46%
5-Y CAGR: 6.24%
SEBI Risk Category: Moderate
Minimum Lumpsum Investment: ₹100
Nippon India Liquid Fund
Nippon India Liquid Fund is managed by Nippon Life India Asset Management Limited and invests in short-term debt instruments and money market securities. The fund focuses on providing liquidity and reasonable returns for investors looking for a low-risk investment avenue.
AUM: ₹26,468.93 Crore
NAV: ₹6,156.28
Minimum SIP: ₹1,000
Exit Load: 0.01%
Expense Ratio: 0.20%
1-Y Return: 7.49%
5-Y CAGR: 6.29%
SEBI Risk Category: Moderately Low
Minimum Lumpsum Investment: ₹1,000
Axis Liquid Fund
Axis Liquid Fund, managed by Axis Asset Management Company Ltd, primarily invests in short-term debt instruments and money market securities. The fund aims to deliver stable returns while maintaining high liquidity, making it suitable for conservative investors.
AUM: ₹25,268.68 Crore
NAV: ₹2,796.16
Minimum SIP: ₹1,000
Exit Load: 0.01%
Expense Ratio: 0.15%
1-Y Return: 7.50%
5-Y CAGR: 6.30%
SEBI Risk Category: Moderately Low
Minimum Lumpsum Investment: ₹500
UTI Liquid Fund
UTI Liquid Fund is managed by UTI Asset Management Company Private Limited and invests in short-term debt and money market instruments. The fund focuses on providing liquidity and reasonable returns, catering to risk-averse investors seeking capital preservation.
AUM: ₹21,108.56 Crore
NAV: ₹4,121.94
Minimum SIP: ₹2,500
Exit Load: 0.01%
Expense Ratio: 0.15%
1-Y Return: 7.47%
5-Y CAGR: 6.27%
SEBI Risk Category: Moderate
Minimum Lumpsum Investment: ₹500
Tata Liquid Fund
Tata Liquid Fund is managed by Tata Asset Management Private Limited and invests in money market instruments and short-term debt securities to provide liquidity and competitive returns, making it suitable for conservative investors looking for safety.
AUM: ₹19,852.61 Crore
NAV: ₹3,969.37
Minimum SIP: ₹150
Exit Load: 0%
Expense Ratio: 0.21%
1-Y Return: 7.47%
5-Y CAGR: 6.26%
SEBI Risk Category: Moderately Low
Minimum Lumpsum Investment: ₹5,000
HSBC Liquid Fund
HSBC Liquid Fund is managed by HSBC Global Asset Management (India) Private Limited and primarily invests in short-term debt instruments and money market securities. The fund aims to provide liquidity and optimal returns, making it a viable option for risk-averse investors.
AUM: ₹18,418.61 Crore
NAV: ₹2,506.14
Minimum SIP: ₹1,000
Exit Load: 0.01%
Expense Ratio: 0.12%
1-Y Return: 7.48%
5-Y CAGR: 6.28%
SEBI Risk Category: Moderately Low
Minimum Lumpsum Investment: ₹5,000
What Are Mutual Funds?
Mutual funds are investment vehicles that pool money from numerous investors to invest in a diversified portfolio of stocks, bonds, or other securities. Managed by professional fund managers, they aim to provide returns aligned with specific investment goals.
Investors buy mutual fund units, representing a share of the fund’s holdings. The value of these units changes based on the performance of the underlying assets. This approach allows individuals to invest in various assets without needing extensive financial knowledge.
Mutual funds offer different types based on risk and return profiles, like equity, debt, and balanced funds. They provide an accessible investment option with benefits like diversification, professional management, and potential for returns over time.
Features Of Emergency Mutual Funds
The main feature of emergency mutual funds is their high liquidity, allowing quick access to cash when needed. These funds prioritize capital preservation with minimal risk, typically investing in low-risk, short-term instruments, making them ideal for unforeseen financial situations.
- High Liquidity: Emergency funds are designed for quick withdrawals without penalties, allowing access to cash within a day or two, which makes them suitable for urgent financial needs.
- Capital Preservation: They focus on preserving the invested capital with minimal risks, often investing in safer, short-term assets to protect against market volatility.
- Low Risk: These funds primarily invest in debt instruments like treasury bills or government bonds, which offer lower returns but provide stability and low risk to the investor.
- Moderate Returns: While returns are generally lower than equity funds, emergency mutual funds offer steady returns, balancing low risk with reasonable growth, suitable for short-term financial security.
Top Mutual Fund For Emergency Fund Based on Expense Ratio
The table below shows the Top Emergency Mutual Funds Based on the highest to lowest expense ratio.
| Name | Expense Ratio (%) | Minimum SIP (Rs) |
| Aditya Birla SL Liquid Fund | 0.21 | 100 |
| Tata Liquid Fund | 0.21 | 150 |
| HDFC Liquid Fund | 0.2 | 100 |
| ICICI Pru Liquid Fund | 0.2 | 99 |
| Kotak Liquid Fund | 0.2 | 100 |
| Nippon India Liquid Fund | 0.2 | 100 |
| SBI Liquid Fund | 0.19 | 500 |
| Baroda BNP Paribas Liquid Fund | 0.17 | 500 |
| LIC MF Liquid Fund | 0.16 | 200 |
| Axis Liquid Fund | 0.15 | 1,000 |
Best Mutual Funds To Park Emergency Fund Based on 3Y CAGR
The table below shows the top-performing Emergency Mutual Funds Based on the Highest 3Y CAGR.
| Name | CAGR 3Y (%) | Minimum SIP (Rs) |
| Aditya Birla SL Liquid Fund | 6.32 | 100 |
| Baroda BNP Paribas Liquid Fund | 6.3 | 500 |
| Axis Liquid Fund | 6.3 | 1,000 |
| Edelweiss Liquid Fund | 6.3 | 100 |
| Union Liquid Fund | 6.3 | 500 |
| Nippon India Liquid Fund | 6.29 | 100 |
| HSBC Liquid Fund | 6.28 | 1,000 |
| Mirae Asset Liquid Fund | 6.28 | 99 |
| UTI Liquid Fund | 6.27 | 2,500 |
| Sundaram Liquid Fund | 6.27 | 1,000 |
Best Emergency Fund Investment In India Based on Exit Load
The table below shows the Best Emergency Mutual Funds Based on Exit Load, i.e., the fee 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 |
| Bajaj Finserv Liquid Fund | Bajaj Finserv Asset Management Limited | 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 |
| 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 |
Historical Performance of Mutual Funds For Emergency Fund
The table below shows the top 10 Emergency Mutual Funds to invest in India based on a 5Y return.
| Name | CAGR 5Y (Cr) | Minimum SIP (Rs) |
| Edelweiss Liquid Fund | 5.41 | 100 |
| Aditya Birla SL Liquid Fund | 5.4 | 100 |
| Union Liquid Fund | 5.39 | 500 |
| Axis Liquid Fund | 5.37 | 1,000 |
| Baroda BNP Paribas Liquid Fund | 5.37 | 500 |
| LIC MF Liquid Fund | 5.37 | 200 |
| Nippon India Liquid Fund | 5.37 | 100 |
| Mirae Asset Liquid Fund | 5.36 | 99 |
| Tata Liquid Fund | 5.36 | 150 |
| ICICI Pru Liquid Fund | 5.35 | 99 |
Factors To Consider When Investing In the Best Mutual Fund For Emergency Fund
The main factor to consider when investing in a mutual fund for an emergency fund is liquidity. You need easy access to your money without delays or penalties, alongside stability, low risk, and returns that protect against inflation.
- Liquidity: Ensure the fund allows quick, penalty-free withdrawals so you can access your money immediately in emergencies. High liquidity is crucial for managing unexpected expenses effectively.
- Low Risk: Choose funds that prioritize capital safety, investing in low-risk assets like treasury bills or government securities. This approach helps preserve your capital, even in volatile markets.
- Stable Returns: Look for funds that offer consistent returns, even if they’re modest. Steady growth ensures that your emergency fund keeps up with inflation without exposing you to high risk.
- Low Expense Ratio: Funds with lower fees help maximize your returns. Choosing a mutual fund with a low expense ratio ensures more of your investment goes toward growing your emergency fund, not fees.
How To Invest In Mutual Funds?
Listed below are the steps for investing in the best Emergency Mutual Funds:
- Research and find out the top-performing funds in the market.
- Evaluate and assess your risk appetite and fix your financial goals.
- Shortlist the funds based on your fundamental and technical analysis.
- Find reliable stockbrokers like Alice Blue to open a demat account.
- Invest in the shortlisted funds and monitor them regularly.
Impact of Government Policies on Mutual Funds For Emergency Fund
Government policies significantly impact mutual funds for emergency funds by influencing interest rates, taxation, and regulatory standards. Interest rate changes can affect returns on debt-based funds, while tax policies impact overall earnings and fund accessibility during withdrawals.
Regulatory policies ensure transparency and investor protection, enhancing the safety of emergency fund investments. However, changes in regulations may lead to adjustments in fund structures or fees, affecting investors’ choices and the overall appeal of mutual fund options.
How Mutual Funds Perform In Economic Downturns?
During economic downturns, mutual funds often experience volatility, especially equity-based funds, as market values decline. This can lead to decreased returns and increased risk. However, debt or government-backed funds tend to perform more steadily due to lower market exposure.
Investors may see mutual funds rebalanced to safeguard capital during downturns, prioritizing assets with greater stability. For emergency funds, low-risk mutual funds like liquid or short-term debt funds remain reliable choices, providing stability despite lower returns.
Advantages Of Investing In Top Mutual Funds for Emergency Funds?
The main advantage of investing in top mutual funds for emergency funds is accessibility. These funds offer high liquidity and relatively low risk, allowing quick access to cash while preserving capital. They also provide modest returns, which can help counter inflation:
- High Liquidity: Emergency mutual funds allow for quick withdrawals without penalties, ensuring you can access funds promptly when unexpected expenses arise.
- Capital Preservation: These funds focus on protecting the initial investment by investing in low-risk securities, providing stability even during market fluctuations.
- Steady Returns: Although returns are generally moderate, they provide consistent growth, which helps the fund value keep pace with inflation over time.
- Professional Management: Top mutual funds are managed by experienced professionals who make informed decisions to minimize risk and optimize returns, relieving investors of complex financial planning.
Risks Of Investing In The Best Mutual Fund For Emergency Fund?
The main risk of investing in top mutual funds for emergency funds is market volatility. While these funds typically invest in lower-risk assets, economic downturns can still affect returns. Additionally, factors such as interest rate changes can impact fund performance:
- Market Volatility: Even low-risk mutual funds can be affected by broader market fluctuations, potentially leading to lower returns during economic downturns or periods of high volatility.
- Interest Rate Risk: Changes in interest rates can affect the value of debt securities within mutual funds, which may result in lower returns or capital loss, impacting the overall performance of the fund.
- Inflation Risk: Although emergency funds aim to preserve capital, they may not always outpace inflation, leading to a decrease in purchasing power over time if returns are insufficient.
- Management Risk: The performance of mutual funds heavily relies on the fund manager’s expertise and decisions. Poor management or strategy changes can adversely affect fund performance and investor returns.
Mutual Funds For Emergency Fund GDP Contribution
Mutual funds for emergency funds contribute indirectly to GDP by facilitating capital mobilization and investment in various sectors. When individuals invest in these funds, the pooled capital is allocated to businesses, fostering growth and stimulating economic activity, which supports overall GDP growth.
Additionally, a well-managed mutual fund sector enhances investor confidence, encouraging more savings and investments. As individuals secure their emergency funds, they are more likely to spend and invest in the economy, contributing to consumer demand and economic expansion, thus positively influencing GDP.
Who Should Invest In The Best Mutual Fund For An Emergency Fund?
Individuals seeking financial security and peace of mind should invest in the best mutual funds for an emergency fund. This includes those with irregular income, families, or anyone wanting to build a safety net to cover unexpected expenses or emergencies.
Moreover, first-time investors or those new to personal finance can benefit from these funds. They provide a relatively low-risk option for safeguarding capital while offering liquidity, making them suitable for individuals prioritizing short-term savings without exposing themselves to high market volatility.
Emergency Mutual Funds – FAQs
Mutual funds are investment vehicles that collect money from multiple investors to invest in a diversified portfolio of assets, such as stocks, bonds, or other securities. Managed by professionals, they aim to provide returns aligned with investors’ financial goals and risk profiles.
Top Emergency Mutual Funds #1: SBI Liquid Fund
Top Emergency Mutual Funds #2: HDFC Liquid Fund
Top Emergency Mutual Funds #3: ICICI Pru Liquid Fund
Top Emergency Mutual Funds #4: Aditya Birla SL Liquid Fund
Top Emergency Mutual Funds #5: Kotak Liquid Fund
These funds are listed based on the Highest AUM.
The Best Emergency Mutual Funds in India based on expense ratio include Aditya Birla SL Liquid Fund, Tata Liquid Fund, HDFC Liquid Fund, ICICI Pru Liquid Fund, and Kotak Liquid Fund.
Investing in mutual funds for an emergency fund is relatively safe, especially when choosing low-risk options like liquid or short-term debt funds. However, market volatility can affect returns, so it’s essential to select funds with a focus on capital preservation and liquidity.
Fixed deposits (FDs) are a good option for an emergency fund due to their stability and guaranteed returns. They offer capital protection and fixed interest rates, providing a reliable source of funds during emergencies, though liquidity may be lower compared to mutual funds.
To invest in mutual funds for an emergency fund, first, assess your financial goals and risk tolerance. Choose low-risk options like liquid or short-term debt funds. Then, open an account with a mutual fund company or brokerage platform like Alice Blue and start investing regularly.
To build an emergency fund, start by setting a target amount, typically three to six months’ worth of living expenses. Open a dedicated savings account, automate regular contributions, and prioritize saving any windfalls or bonuses until you reach your goal.
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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.
