Liquid Funds Your Short-Term Monetary Parking
What is Liquid Fund? • According to SEBI, an open-ended liquid scheme is the one which invests in debt and money market securities whose maturity period is up to 91 days only. • In layman's language, it can be said that liquid fund is that category of mutual funds that mainly invests in the money market instruments such as treasury bills, term deposits, commercial papers, certificate of deposits.
Who Should Invest in Liquid Funds? • These funds are basically for those people who are looking for investment opportunities to park their idle money for short-term. • Conservative investors are the ideal ones to invest in the funds under liquid category as the risk involved is really low. • Compared to the traditional investing options for short term like bank accounts, these funds yield much better returns. • It includes high liquidity which means that you are free to redeem your money as and when required. Therefore, people who aren't seeking an opportunity to park their money for long-term and need liquidity all the time may invest in these funds.
Top Performing Liquid Funds There are a number of liquid funds that have been launched by different fund houses. It is a tough job to select the best one, therefore to simplify it for you, in the coming slides you get to read about the best mutual funds in liquid category. These funds have been shortlisted after conducting in-depth research on the basis of different parameters such as the portfolio selection, performance, risk management, the strategies followed by risk managers, etc.
Tata Liquid Fund (G) • This is an open-ended scheme that may invest up to 100% of the assets in debt and money-market instruments to generate reasonable returns for the investors along with high liquidity. • Formerly, this fund was known as Tata Money Market Fund. • This scheme has outperformed its benchmark CCIL T Bill Liquidity Weight and category in one-year, three-year, and five-year performance as on September 3rd, 2018. • Its Sharpe ratio is 3.22 as on August 31st, 2018 which means it is really good in delivering high returns with the risk taken.
Reliance Liquid Fund (G) • This open-ended liquid scheme mainly invests in debt and money market instruments to help investors earn optimal returns along with high liquidity. • The one-year, three-year, and five-year returns yielded by this scheme as on September 03rd, 2018 are 7.05%, 7.26%, and 8%. It has surpassed its benchmark CCIL T Bill Liquidity Weight and category in performance by a good margin. • The standard deviation of this scheme by Reliance MF is 0.20 which means it may face slight fluctuations.
ABSL Liquid Fund (G) • Formerly, this scheme was known as Aditya Birla Sun Life Cash Plus. • This open-ended scheme was launched on June 16th, 1997 and invests mainly in high quality debt and money-market instruments. • As on September 3rd, 2018, it has outperformed its benchmark as well as category's performance by a good margin in one-year, three-year, and five-year time period. • It has ever surpassed all its competitors in five-year tenure.
Comparison As on July 31st, 2018
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