TradeWindowFx.com
Tuesday, January 31, 2023
No Result
View All Result
  • Home
  • Banking
  • Business
  • Marketing
  • Insurance
  • News
TradeWindowFx.com
No Result
View All Result
Home Business
Guide On Selecting Liquid Funds To Gain Maximum Return On Your Investment

Guide On Selecting Liquid Funds To Gain Maximum Return On Your Investment

Saykat by Saykat
in Business
169 7
0
326
SHARES
2.5k
VIEWS
Share on FacebookShare on Twitter

Reasons why people invest in liquid funds

Some people invest in a liquid fund to build and maintain an emergency fund. Some people invest in a liquid fund to park a lump sum amount for a short period until they figure out how to invest it. What is your reason for investing in a liquid fund? This article will guide you in selecting liquid funds to gain maximum return on your investment.

How to select a liquid fund?

While selecting a liquid fund for investment, you should consider the following parameters:

  • Choosing the fund house

Before you get down to choosing the right liquid fund for yourself, it is important to choose the right fund house. You should make sure that you choose a fund house of reputation. The fund house should have the required expertise in managing different types of mutual fund schemes. The returns given by various mutual fund schemes of the fund house should be consistent. The fund managers of various schemes should have the required qualification and work experience of running various mutual fund schemes.

  • Compare liquid fund schemes of various fund houses

You should compare the liquid funds of various fund houses before zeroing on a liquid fund scheme for investment. You should compare schemes on various parameters such as the current portfolio of the scheme, returns given by the scheme, assets under management (AUM), expense ratio, etc. 

Most liquid funds invest in similar securities, and as a result, the returns will be more or less identical with some variation here and there. If there is a huge variation in the returns, you may check if the fund is taking higher risks to earn higher returns and whether you are okay with it.

  • Fund portfolio

You should check the current portfolio of the scheme. Check the proportion of Treasury Bills and Government bonds. These fixed-income securities carry the lowest risk. Check the credit rating of other fixed-income securities in the scheme portfolio. Ideally, it should be the highest rating.

  • Comparison of returns with bank deposits

Some investors consider liquid funds an alternative investment option to bank deposits such as savings accounts and fixed deposits. In that case, you may compare the returns of liquid funds with savings account interest and fixed deposit interest rates. In most cases, liquid funds will give better returns compared to savings account interest rates paid by most banks in the range of 2-4% p.a. 

The fixed deposit rates may be better than liquid funds. But, you should compare the post-tax returns. For people in the highest tax bracket who wish to invest for more than three years, liquid funds are more tax-friendly than bank fixed deposits.

  • Expense ratio

The expense ratio is charged to the scheme as a percentage of the assets under management (AUM). So, the expense ratio directly affects your returns as an investor. The lower the expense ratio, the better. Ideally, you should choose a liquid fund with a lower expense ratio for investment.

  • Credit rating of the instruments

You should check the credit rating of the instruments in which the scheme has invested. Any fixed income securities, apart from Government securities, carry credit risk. There is a risk of default on principal repayment, interest repayment, or both. Is your investment objective capital protection rather than generating returns on it? In that case, you should give preference to a liquid fund that invests only in Government securities and other securities with the highest credit rating.

  • Instant liquidity feature

As an investor, if you are looking to build and maintain an emergency fund, your preference should be for a liquid fund that offers the instant liquidity feature. Some liquid funds offer the insta redemption feature, through which the redemption proceeds are credited to the investor’s bank account instantly. 

However, there may be limits on the amounts that can be redeemed through this feature. Some liquid funds allow redemption of 90% of the fund value or Rs. 50,000, whichever is lower through the insta redemption feature. For redemption of the remaining amount, an investor has to go through the regular redemption process.

Click to know more on liquid funds

Performance of liquid funds

Let us look at the performance of top liquid funds.

Scheme name AUM (Rs. crores) 1-year 3-years 5-years
Quant Liquid Fund 455 4.26% 5.59% 6.17%
Franklin India Liquid Fund 1,645 3.38% 4.81% 5.75%
Mahindra Manulife Liquid Fund 1,562 3.46% 4.80% 5.75%
IDBI Liquid Fund 890 3.46% 4.82% 5.75%
Edelweiss Liquid Fund 991 3.52% 4.80% 5.74%

 

Note: The returns are as of 20th Jan 2022. The returns are for direct plans with growth option. The one-year returns are absolute. The three and five-year returns are CAGR. The funds have been ranked based on five-year performance.

 

Related Posts

8 Tips on what to sell on Amazon to generate high revenues
Business

8 Tips on what to sell on Amazon to generate high revenues

January 31, 2023
Choosing a business consultant: What to do
Business

Choosing a business consultant: What to do

January 31, 2023
How to Ensure Your Customers Receive a High-Quality Product From Your Manufacturing Business
Business

How to Ensure Your Customers Receive a High-Quality Product From Your Manufacturing Business

January 31, 2023
Next Post
Bookkeeping License vs Certification: Which Do You Need?

Bookkeeping License vs Certification: Which Do You Need?

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Recent Posts

  • 8 Tips on what to sell on Amazon to generate high revenues January 31, 2023
  • Choosing a business consultant: What to do January 31, 2023
  • How to Ensure Your Customers Receive a High-Quality Product From Your Manufacturing Business January 31, 2023
  • 3 Essential SaaS Marketing Strategies to Try in 2023 January 30, 2023
  • Top 5 Hottest Women Bodybuilders January 30, 2023

Categories

  • Accessories (4)
  • All (283)
  • Animal (1)
  • apksavers (9)
  • Apps (4)
  • Banking (9)
  • Beauty (1)
  • Business (211)
  • Car (5)
  • CBD (4)
  • Digital marketing (2)
  • eCommerce (1)
  • Education (29)
  • Entertainment (19)
  • Fashion (38)
  • Finance (1)
  • Food (4)
  • Gadget (4)
  • Games (5)
  • Health (61)
  • Home (9)
  • Home Improvement (1)
  • Insurance (10)
  • Law (9)
  • Lifestyle (46)
  • Loan (2)
  • Marketing (31)
  • News (241)
  • Online Dating (1)
  • Pet (3)
  • Product (1)
  • Real Estate (1)
  • Science & Technology (1)
  • Shopping (1)
  • Social Media (6)
  • Sports (27)
  • Tech (20)
  • Technology (112)
  • Tips and guide (19)
  • Trading (1)
  • Travel (18)
  • Wikipedia (1)

TradeWindowFx.com Provide by Forex Business Marketing Banking insurance News Here. 2021 top breaking Forex news here..

Contact: support[at]gposting.com

Follow us on social media

Categories

  • Accessories
  • All
  • Animal
  • apksavers
  • Apps
  • Banking
  • Beauty
  • Business
  • Car
  • CBD
  • Digital marketing
  • eCommerce
  • Education
  • Entertainment
  • Fashion
  • Finance
  • Food
  • Gadget
  • Games
  • Health
  • Home
  • Home Improvement
  • Insurance
  • Law
  • Lifestyle
  • Loan
  • Marketing
  • News
  • Online Dating
  • Pet
  • Product
  • Real Estate
  • Science & Technology
  • Shopping
  • Social Media
  • Sports
  • Tech
  • Technology
  • Tips and guide
  • Trading
  • Travel
  • Wikipedia

Recent News

  • 8 Tips on what to sell on Amazon to generate high revenues
  • Choosing a business consultant: What to do
  • How to Ensure Your Customers Receive a High-Quality Product From Your Manufacturing Business
  • Home
  • Privacy Policy
  • Contact us

© Copyright 2021, All Rights Reserved

No Result
View All Result
  • Contact us
  • Home
  • Privacy Policy

© Copyright 2021, All Rights Reserved

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
Cleantalk Pixel