5 Best Performing Liquid Funds to Invest in

Top 5 Liquid Funds

Liquid funds are a type of debt funds which invest in treasury bills, commercial papers, bank fixed deposits, etc. The maturities of all these in a liquid fund is up to 90 days. When you invest your money in a liquid fund, the same is lent by the mutual fund to institutions such as banks and corporates.

Top Mutual Funds to Invest in Now

Important Points to Know about Liquid Funds

  1. If you want to invest for a short period i.e. from 1 day-6 months, liquid funds are the best option.
  2. One can view these as an alternative to keeping money in a savings bank a/c where you get 3-4%, whereas liquid funds tend to offer 5%-7% return
  3. There is no lock-in period, so you can withdraw anytime.
  4. There are no exit loads in liquid funds, when one withdraws no amount is deducted by the AMC.
  5. Liquid funds have the lowest cost amongst all mutual fund schemes. They carry an expense ratio of only 0.05-0.20%. This could vary for different liquid funds of different asset management companies.
  6. The risk or probability of default is minimal in a liquid fund since these funds lend money to highest rated corporates and banks.
  7. Every mutual fund company has a liquid fund, so there are more than 40 liquid funds. We help you know the best amongst them.

5 Best Liquid Funds

Basis the performance, risk metrics and the expense ratio, these are the returns for last 1, 3 and 5 years (in % terms)

As we can see, there is not much to choose in terms of returns. They are almost similar; we would recommend you pick up any two or three of these and divide your money equally among them.

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