An Overview of Liquid Funds in India for 2023

Looking for a secure and flexible way to invest your surplus funds? Liquid funds in India offer a balanced approach to capital preservation and liquidity, making them a popular choice among investors. Designed to invest in highly liquid money market instruments and debt securities, liquid funds are suitable for those who need to park their funds for short periods. This article provides an in-depth look at some of the best liquid funds in India, along with step-by-step guidance on how to invest in them.

Understanding Liquid Funds

Liquid funds are a type of debt fund that invests in short-term debt instruments such as treasury bills, commercial papers, and certificates of deposit. These funds are ideal for investors seeking high liquidity and assured returns. The key advantages of liquid funds include:

No lock-in period: Investors can withdraw their funds anytime. High liquidity: Funds are typically redeemed within 24 hours of a withdrawal request. Lower risk: Compared to other debt funds, liquid funds are less volatile and offer lower risk. Transparency: Regular returns, fee structures, and risk metrics are easily accessible.

How to Invest in Liquid Funds

Investing in liquid funds in India is straightforward, made possible through platforms like ET Money. Follow these simple steps to get started:

Sign up on the ET Money app or website. Navigate to the Mutual Funds section and select the desired liquid fund. Click 'Invest' and choose the investment amount and method (SIP or lump sum). Provide the required KYC details such as PAN and bank details. Complete the investment process.

Top Liquid Funds to Invest in 2023

Based on performance, risk levels, and expense ratios, here are three of the best liquid funds in India to consider for 2023:

Aditya Birla Sun Life Liquid Fund

This open-ended liquid scheme has been operational since June 1997 and is managed by experienced fund managers. Key features include:

No lock-in period: Allows for immediate withdrawal. High liquidity: Typically redeemed within 24 hours. Low risk: Managed with high-quality debt securities. Consistent returns: Offers stable returns over short to medium terms.

With a long-term annual return of 7.83% over the past decade, the fund is a reliable choice. Fee structures are transparent, with an Expense Ratio ranging from 0.6-1%.

Nippon India Liquid Fund

This open-ended liquid fund, launched in December 2003, focuses on providing returns through short-term investing. Key aspects include:

Asset allocation: Invests 91.22% in debt and 8.78% in cash and other receivables. Liquidity: Typically redeems within 24 hours from a withdrawal request. Low risk strategy: Uses conservative investment strategies to minimize risk. High returns: Offers maximized returns through strategic investments.

Nippon India Liquid Fund has a current asset size of Rs. 23106.45 cr. The minimum investment for a SIP is Rs. 100, and for a lump sum, it is Rs. 10. The fund has an Expense Ratio of 0.2%, making it one of the cost-effective options in the market.

Conclusion

Investing in liquid funds can provide both liquidity and a reasonable return on investment. The key to making the right choice lies in understanding your financial goals, risk tolerance, and the performance of the fund over time. Tarrakki app can be a valuable tool in guiding you through the process of selecting and investing in these funds. Happy investing!