Best Liquid Funds - Consider the best performing liquid mutual funds to invest in 2024 with Scripbox.com. Find the list of best liquid funds in India on the basis of Returns, Latest Nav, Ratings, Performance etc
Learn how Scripbox Recommends funds| Fund Name | 1Y Returns | YTM |
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Note : *NA implies that Fund is relatively new. Not enough data available
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Below are the best liquid mutual funds in india:
ICICI Prudential Liquid Fund Direct (G) is a Debt fund that has delivered a 1 Year return of 7.5%, a 3 Years return of 6.4% and a 5 Years return of 5.4%. The fund has an expense ratio of 0.2% and an AUM of ₹50756 crores as of 2024-12-22.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹1000. The fund allocates 0107.81% to debt and -7.81% to other assets.
Axis Liquid Fund Direct (G) is a Debt fund that has delivered a 1 Year return of 7.5%, a 3 Years return of 6.5% and a 5 Years return of 5.4%. The fund has an expense ratio of 0.1% and an AUM of ₹33183 crores as of 2024-12-22.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹1000. The fund allocates 0109.53% to debt and -9.53% to other assets.
SBI Liquid Fund Direct (G) is a Debt fund that has delivered a 1 Year return of 7.4%, a 3 Years return of 6.4% and a 5 Years return of 5.4%. The fund has an expense ratio of 0.2% and an AUM of ₹64117 crores as of 2024-12-22.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹1000. The fund allocates 0101.54% to debt and -1.54% to other assets.
UTI Liquid Fund Direct (G) is a Debt fund that has delivered a 1 Year return of 7.4%, a 3 Years return of 6.4% and a 5 Years return of 5.4%. The fund has an expense ratio of 0.2% and an AUM of ₹25219 crores as of 2024-12-22.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹1000. The fund allocates 093.32% to debt and 6.68% to other assets.
HDFC Liquid Fund Direct (G) is a Debt fund that has delivered a 1 Year return of 7.4%, a 3 Years return of 6.4% and a 5 Years return of 5.3%. The fund has an expense ratio of 0.2% and an AUM of ₹72653 crores as of 2024-12-22. It was Launched on 2013-01-01. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹1000. The fund allocates 0101.83% to debt and -1.83% to other assets.
Mahindra Manulife Liquid Fund Direct (G) is a Debt fund that has delivered a 1 Year return of 7.5%, a 3 Years return of 6.5% and a 5 Years return of 5.5%. The fund has an expense ratio of 0.2% and an AUM of ₹1311 crores as of 2024-12-22. It was Launched on 2016-07-04. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹1000. The fund allocates 0101.10% to debt and -1.10% to other assets.
Union Liquid Fund Direct (G) is a Debt fund that has delivered a 1 Year return of 7.5%, a 3 Years return of 6.5% and a 5 Years return of 5.4%. The fund has an expense ratio of 0.1% and an AUM of ₹4337 crores as of 2024-12-22. It was Launched on 2013-01-01. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 0103.67% to debt and -3.67% to other assets.
Liquid mutual funds are considered as a better investment option to park surplus money instead of holding it in savings bank balance. The reason is that these liquid funds provide liquidity, higher returns in comparison to their counterparts, and a lower interest rate volatility risk. You must invest in these funds if it fulfills your investment objectives for the chosen investment period. Now while selecting the best liquid funds to invest in 2024 you must consider a few factors to ensure to are making a well-informed decision. You need to consider the fund’s objectives, its credit score, maturity, historical performance, trends in NAV, past returns, and future prospects.
Liquid mutual funds are high liquidity open-ended income schemes. They are a type of debt fund. The asset allocation of the funds is across short term market instruments such as treasury bills, commercial paper, government securities, fixed deposits, other debt or fixed income securities. These instruments have maturity up to 91 days.
Since the maturity period is less, they mitigate interest rate volatility risk. The credit risk or risk of default in repayment is also very low in these funds. Additionally, the fund manager ensures that they invest in instruments with good credit quality. Therefore, liquid mutual funds are the best option to invest for the short term.
NAV for liquid funds is calculated for 365 days whereas for other debt mutual funds NAV is calculated only for business days. The units of liquid funds are allocated as per the previous day’s NAV. The NAV of these funds does not fluctuate much as compared to other funds.
Liquid funds work just like a savings scheme. In other words, individuals can create their emergency fund or cash fund these funds.
Liquid funds are better and safe option for investing surplus money when compared to its counterpart i.e. saving account balance. Top mutual funds carry a lot of benefits for an investor and become an ideal investment option. The advantages are listed below:
Liquid funds are ideal for an investor who has some spare cash for a short period and wants to earn a return higher than bank interest on savings bank account balance. An investor must park some emergency funds with himself as the redemption will be processed on the next working day.
Example
An investor received Rs 100,000 as a bonus from his employer in May. He has a LIC premium due in July end. Now the funds are parked idle for him and he will need it in 2 months. Either he can invest in FD and lock-in his funds or park in a savings bank account. Both the options will fetch him a return of not more than 5%. Here he can think of liquid funds as a better option and invest for 2 months. This will fetch him higher returns with the freedom to withdraw anytime without any early exit fee.
The tax implications on liquid mutual funds investment depend on the duration. The duration over which an investor stays invested is called holding period. A capital gain arises from these funds. A capital gain is taxed based on the period of holding of the investment.
Short term capital gain arises when the period of holding is less than years. Long term capital gain arises when the period of holding is more than 3 years. Short term capital gain will be added to an investor’s total income. And the investors are taxed as per their tax slab rate. And the tax slab varies as per the age of the investor. Long term capital gain is taxed at a rate of 20% after indexation.
As per the Finance Bill 2023, debt mutual funds will no longer have the LTCG benefit. From April 1st 2023, capital gains from debt funds will be taxable as per the investor’s IT slab rate. This is irrespective of the investment holding period.
These funds do not help investors to save tax. For tax savings, one can invest in equity funds such as the ELSS fund.
Additionally, use the Scripbox’s Income Tax Calculator to determine the taxable income and best tax saver investment plans.
Investors can invest in liquid mutual funds either through Offline or Online technique.
Offline Investing: The mode of investing requires the investor to fill out all the details in the application form and submit documents like Aadhar card, pan card, and voter id, etc. with the fund house. The list of documents are:
One can invest offline through a broker or self. Brokers help in choosing the best-suited funds by assessing all the factors. For all those who aren’t well versed with the markets can take the help of a broker to invest in the right set of funds.
There are multiple online platforms through which one can invest in mutual funds. Scripbox is one such platform that provides the best funds in the market for its investors. Scripbox algorithmically selects Mutual Funds and does an annual review of funds to ensure the fund’s performance and investor goals are on track.
Liquid Mutual Fund schemes invest in money market instruments. These are certificate of deposits, commercial paper, and treasury bills.
Certificate of deposits: A deposit of money in a bank or a financial institution is a certificate of deposits (CD). It is similar to FD but differs in two ways. CD is only for large sums of money and CD is freely negotiable. CDs are highly liquid, considerably safe and give returns higher than t-bills. CDs are issued at a discount and the tenure ranges from 7 days up to an year.
Commercial Paper (CP): An unsecured promissory note issued by high rated companies to meet short term capital needs by raising money from the market. The tenure ranges from a day to 270 days. The returns are higher than t-bills but not as secured as them. CPs are traded in the secondary market.
Treasury Bills: Treasury bills (t-bills) are issued by the central government. T-bills are one of the safest investment option available in the money market. These are zero-risk instruments and hence the returns form these are not attractive. T-bills comes with different maturity periods such as 91 days, 182 days and 364 days. . They are circulated in primary and secondary markets, and are issued a discount to their face value.
An investor who has a surplus fund can invest in these funds rather than keeping the amount in the savings bank account. Investing in top mutual funds would mean earning a higher return than saving account interest and FD interest.
No, Liquid mutual funds do not help investors to save tax. For tax savings, one can invest in equity funds such as the ELSS fund. Use Scripbox’s Income Tax Calculator for best tax saver investment plans. Liquid funds taxation is similar to debt funds.
No, liquid funds do not have a lock-in period. An investor can anytime withdraw the invested amount after 7 days of investing in these funds. No penalty or exit load is applicable to an early exit (post 7 days). Hence, it is a better option to invest in these funds since a fixed deposit would have a lock-in period and charge penalty for early withdrawal.
Liquid funds are always a better option than FD as they giver higher returns than FD. Also, they have high liquidity. The current FD rates vary between 4-5% (post-tax). Their tax is slightly higher than FDs, but they are they do not have a lock-in period and there are no penalties for premature withdrawal like FDs.
An investor can invest his surplus or spare funds which he would not need soon up to 3 months or later. However, this fund will also be available to be withdrawn without an exit load or penalty.
India Liquid fund is a class of debt mutual funds. The asset allocation of the funds is across short term market instruments such as treasury bills, commercial paper, government securities, fixed deposits, other debt or fixed income securities. Liquid funds have a maturity up to 91 days.
Debt mutual funds are of several types like overnight funds, short term funds, ultra short term funds, gilt funds, medium and long term funds with multiple maturities. Liquid funds are the safest of all the debt funds available. Debts fund can be either a direct mutual fund or regular mutual fund.
Liquid funds have low risk as the maturity period is short. These funds invest in fixed income-generating assets like fixed deposit, treasury bills which have short-term maturity and low risk. However, one must consider the credit score as an important factor to know how safe is your liquid fund. The liquid fund with low credit score can lead to default risk.
Yes investor’s can invest in liquid funds through SIP. But there is no point in doing that as their NAV remains more or less stable. SIP best works in high volatility and NAV is affected by market volatility. Instead, investors can do a lump sum in a liquid fund and do an STP in an equity fund. A standing instruction has to be given to the AMC as to when the STP has to start and how much should be transferred. The rest is done automatically. However, for investors interested in knowing the potential SIP returns can use the SIP calculator by Scripbox. Scripbox’s SIP calculator is completely online and free to use.
Yes, the fund house allows the investor to do lump-sum investment.
Liquid Mutual funds are suitable for short term investment horizon. The mutual funds to invest for 2024 are Tata Liquid Fund and Axis Liquid Fund. Scripbox has these funds as featured funds in their Emergency fund portfolio.