Last Updated on Jul 30, 2024 by Anjali Chourasiya
| Name | AUM (Rs. in cr.) | 5Y CAGR (%) | 3Y CAGR (%) | Expense Ratio (%) | Volatility (%) | Minimum Lumpsum (Rs.) |
| Quant Liquid Plan | 1,807.32 | 5.84 | 5.22 | 0.29 | 0.14 | 5,000.00 |
| Mahindra Manulife Liquid Fund | 794.91 | 5.38 | 4.85 | 0.15 | 0.07 | 1,000.00 |
| Franklin India Liquid Fund-Super | 1,625.38 | 5.37 | 4.75 | 0.13 | 0.07 | 10,000.00 |
| Edelweiss Liquid Fund | 1,583.93 | 5.36 | 4.83 | 0.15 | 0.08 | 5,000.00 |
| Aditya Birla SL Liquid Fund | 46,405.76 | 5.36 | 4.82 | 0.21 | 0.10 | 500.00 |
| PGIM India Liquid Fund | 554.68 | 5.35 | 4.81 | 0.13 | 0.09 | 5,000.00 |
| Nippon India Liquid Fund | 28,533.11 | 5.34 | 4.79 | 0.20 | 0.10 | 1,000.00 |
| Baroda BNP Paribas Liquid Fund | 10,252.63 | 5.32 | 4.83 | 0.19 | 0.08 | 5,000.00 |
| Axis Liquid Fund | 27,001.80 | 5.31 | 4.79 | 0.17 | 0.08 | 500.00 |
| LIC MF Liquid Fund | 8,561.89 | 5.30 | 4.78 | 0.16 | 0.08 | 5,000.00 |
Note: The above information is dated 1st October 2023. The parameters used to filter the list of top flexi cap funds on Tickertape’s Mutual Fund Screener are:
- Category > Debt > Liquid Fund
- Plan – Growth
- 5Y CAGR: Set high to low
What are liquid funds?
Liquid mutual funds are also known as money-market funds. They ensure high liquidity to the investors by investing their capital in short-term debt instruments and money market securities. They are considered secure investment instruments because of the high credit rating of money market instruments and the minuscule risk of losing the invested capital.
Some of the instruments that constitute a liquid fund’s portfolio include certificates of deposits (CDs), corporate bonds, treasury bills (T-bills), debentures, commercial paper, and more.
About the top 3 liquid funds in India
Quant Liquid Plan
Quant Mutual Fund launched the Quant Liquid Plan in 2005. The minimum lump sum investment required for this fund is Rs. 5,000. Quant Liquid Plan holds Assets Under Management (AUM) of Rs. 1,807.32 cr. as of 1st October 2023. For the same date, the Quant Liquid Plan has an NAV (Net Asset Value) of Rs. 37.49, and the expense ratio is 0.29%. To learn about its performance and peer comparison, click here.
Mahindra Manulife Liquid Fund
This is a liquid debt fund belonging to Mahindra Manulife Mutual Fund house. Launched in 2016, the fund needs a minimum lump sum investment of Rs. 1,000. Mahindra Manulife Liquid Fund holds an AUM of Rs. 794.91 cr. as of 1st October 2023 and an NAV of Rs. 1,516.28. The expense ratio of the Mahindra Manulife Liquid Fund is 0.15%. Click here to learn about its performance and fund managers.
Franklin India Liquid Fund-Super
Franklin India Liquid Fund-Super was launched in 1996 and is an open-ended liquid debt fund. As of 1st October 2023, the AUM of the fund is Rs. 1,625.38 cr. The minimum lump sum investment in Franklin India Liquid Fund-Super is Rs. 10,000. The NAV of the Sundaram Liquid Fund as of 1st October 2023 is Rs. 3,498.17, and the expense ratio is 0.13. To know about the fund’s portfolio and tax implications, click here.
Who can invest in liquid funds?
The returns offered by liquid funds are higher than that of a regular savings account. If you are an Indian and have an account with an Indian bank, then you can invest in liquid funds after completing your Know Your Customer (KYC) formalities. In case you are an NRI, you can also invest in Indian liquid funds as long as you adhere to the Foreign Exchange Management Act (FEMA).
Generally, investors choose liquid funds for the short-term investment plan. Another reason to choose liquid funds is that they also offer indexation benefits. Therefore, whether or not you should invest in liquid funds depends on your financial goals and other factors!
Factors to consider before investing in liquid funds
Here are some crucial aspects that you must consider before investing in liquid funds in India:
Risks
Liquid funds do not experience a lot of volatility. Hence, the net asset value (NAV) of the fund remains almost steady. However, if the credit rating of any underlying security drops, then there is a possibility that the NAV can experience a drop, too.
Returns
Regarding numbers, savings accounts in India have a return rate of ~4%. Whereas a liquid fund offers you around 4-8% returns on average. Therefore, consider the returns when you are planning to invest.
Exit load
It is critical to note that though liquid funds can be redeemed anytime, an exit load would apply if you redeem the funds within the first seven days. This would reduce the net earnings from the fund.
Expense ratio
Liquid funds charge an annual fee called an expense ratio for fund management services. This is a percentage of the total assets of the fund. Hence, this is one of the important factors to consider when choosing a liquid fund.
Investment plan
Before investing in any instrument, make sure you have a proper investment plan. Many investors use liquid funds to create an emergency fund, offering higher liquidity while giving reasonable returns at lower risk.
Liquid funds taxation as per the Union Budget 2024-2025
Liquid mutual funds come under debt funds.
The Union Budget 2024 has introduced significant changes to the taxation of debt mutual funds. Here is a detailed breakdown of the new tax rules:
Short-Term Capital Gains (STCG)
If you sell your debt fund units within three years (36 months), the gains from these investments are considered short-term capital gains. According to the new budget, these gains will be taxed according to your income tax slab rate.
Long-Term Capital Gains (LTCG)
For debt funds held for over three years (36 months), the gains are categorized as long-term capital gains. The key points to note under the new budget are:
- Tax Rate: The tax rate for long-term capital gains on debt funds is now a flat 12.5%, regardless of the amount of gain.
- No Indexation Benefit: The benefit of indexation, which previously allowed investors to adjust the purchase price of their assets for inflation, has been removed for debt funds. This means that the entire gain from selling a debt fund after three years will be taxable at the flat rate of 12.5%.
Summary
| Capital Gains Tax | Description |
| Short-Term Capital Gains (STCG) | If you sell your debt fund units within three years (36 months), the tax will be as per your income tax slab. |
| Long-Term Capital Gains (LTCG) | For debt funds held for over three years (36 months), the tax rate is now a flat 12.5% without indexation benefits. |
Conclusion
Liquid Funds are low-risk investment instruments with better returns for a short-term investment plan. Whether to invest in liquid funds depends entirely on your financial goals. However, before investing, consult your financial advisors and tailor your portfolio for risk tolerance and market volatility before investing. You can save your efforts and time by using Tickertape’s Mutual Fund Screener to find the best mutual fund based on your risk tolerance and investment preferences!
FAQs
How to invest in liquid funds?
Investing in liquid mutual funds is similar to investing in any other mutual fund. You can use Tickertape Mutual Fund Screener to find the best funds that suit your investment needs. Once you’ve chosen the best mutual fund, you can visit their website and invest. After investing in the mutual fund, you can use the Tickertape Portfolio to constantly monitor the performance of the fund.
What are the top 5 liquid funds in 2023?
The top 5 liquid funds in 2023 are
- Quant Liquid Plan
- Mahindra Manulife Liquid Fund
- Franklin India Liquid Fund-Super
- Edelweiss Liquid Fund
- Aditya Birla SL Liquid Fund
Note: These are curated from Tickertape Mutual Fund Screener and as of 1st October 2023. The funds are derived based on the 5-yr CAGR. You can use your preferred parameters like 3yr-CAGR, Absolute Returns – 3M, etc., to get the top liquid funds.
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