Best Liquid Mutual Funds In India 2024

Today, we are going to explore the realm of finance, specifically examining liquid mutual funds. However, what it is? Well, liquid mutual funds are those funds that allow users to invest for a long halt while giving them the freedom to liquidate ( or get the money out) the investments at any point.

This comprehensive guide aims to provide a clear understanding of financial instruments. Whether you’re an experienced investor or a newcomer navigating financial intricacies, join us in unravelling the nuances of short-term wealth creation. Throughout this exploration, we will analyze the merits, and potential risks, and showcase the top performers within the domain of liquid mutual funds.

List of Best Liquid Mutual Funds in 2024

Mutual Fund Name	1-Year Returns	3-Year Returns	5-Year Returns
Baroda BNP Paribas Liquid Fund Direct Bonus	7.16%	5.22%	5.29%
PGIM India Liquid Fund Direct Plan Annual Bonus Option	7.2%	5.2%	5.3%
IDBI Liquid Fund Regular Bonus	6.55%	5.13%	5.32%
PGIM India Liquid Fund Annual Payout Inc Dist cum Cap Wdrl	7.18%	5.19%	4.58%
Axis Liquid Fund Direct Plan Bonus	7.2%	5.2%	5.3%
ICICI Prudential Liquid Fund Direct Plan	7.12%	5.14%	5.26%
PGIM India Liquid Fund Annual Reinvestment Inc Dist cum Cap Wdrl	7.7%	7.2%	7.8%
NIPPON INDIA ULTRA SHORT DURATION FUND – Direct Plan	6.68	6.27	4.98

Baroda BNP Paribas Liquid Direct Fund Bonus

Fund Manager – Mayank Prakash & Vikram Pamnani

Baroda BNP Paribas Liquid Direct Fund Bonus is designed for low-risk investments. These funds focus on highly liquid assets like short-term debt and money market securities. The goal is to balance safety with optimal returns. Managed by a fund manager, the emphasis is on capital protection. The fund offers better post-tax returns than regular savings accounts and a quicker withdrawal without exit loads.

As of January 10, 2024, the fund’s NAV stands at ₹2739.7412, and it has demonstrated consistent performance, ranking 5.22 in its category. The portfolio predominantly consists of debt holdings (102.97%), including government securities, commercial paper, and treasury bills. The fund’s expense ratio is 0.19% and has an exit load for redemptions within specified days. Investors seeking stability and liquidity for short-term goals may find this fund suitable.

PGIM India Liquid Fund Direct Plan Annual Bonus Option

Fund Manager – Puneet Pal and Bhupesh Kalyani

Launched on December 11, 2013, the fund has demonstrated consistent performance with annual returns of 7.76%. Its risk level is rated as Low to Moderate, which makes it a great fund to add to your portfolio. The fund aims to provide a safe investment option and has a track record of 7.7% returns over the past year.

With an AUM of ₹436 Cr, the fund has an expense ratio of 0.1%. It is benchmarked against the CRISIL Liquid Fund TR INR. The fund primarily allocates its assets to debt and cash, with a credit rating breakup of 97% in AAA and 3% in AA. Top holdings include Oil And Natural Gas Corporation Limited, Union Bank Of India, Bank Of Baroda, and others.

Investors considering the PGIM India Liquid Fund Direct Plan Annual Bonus Option for their portfolio can utilize tools like the Lumpsum Calculator to estimate potential returns.

IDBI Liquid Fund Regular Bonus

Fund Manager – Mr Raju Sharma

Designed to offer a brief investment avenue, this fund does it with optimal liquidity and consistent returns. The fund strategically allocates its corpus to low-risk money market and debt instruments with maturities of up to 91 days. The asset allocation pattern is outlined in the Scheme Information Document (SID) which involves Debt and Money Market Securities. The exit load structure is contingent on the number of days from the date of allotment which progressively diminishes over time.

This fund provides two plans for investment, Regular and Direct Plan. Each offers Dividend and Growth Options. The minimum investment is set at Rs. 5000, with subsequent additions. Additionally, the fund facilitates Systematic Investment Plans (SIP) with monthly and quarterly options.

IDBI Liquid Fund also provides investors with options such as Systematic Transfer Plans (STP) and Systematic Withdrawal Plans (SWP) which are subject to specific conditions. Tax implications for resident and non-resident investors are delineated, covering aspects such as Dividend Distribution Tax (DDT) and Capital Gains Tax. The Riskometer categorises this product as suitable for investors seeking high liquidity and regular income for the short term.

PGIM India Liquid Fund Annual Payout Inc Dist cum Cap Wdrl

Fund Manager – Bhupesh Kalyani and Puneet Pal

The fund has been operational since September 10, 2012. With an AUM of ₹561.50 Cr and a NAV of ₹144.76, the fund follows a low to moderate-risk profile. It primarily invests in liquid and money market instruments with a maturity of up to 91 days, aiming to provide high liquidity. The minimum investment is set at ₹5,000, and the fund offers both dividend and growth options. The scheme has demonstrated a 1-year return of 7.53% and a 3-year return of 6.27%, making it suitable for investors seeking short-term stability and regular income.

Axis Liquid Fund Direct Plan Bonus

Managed By – Davang Saha, Aditya Pagaria, Sachin Jain

The Axis Liquid Fund Direct Plan, with assets totalling ₹21,837 Crores as of December 31, 2023, presents a compelling option for short-term investors. Boasting a competitive expense ratio of 0.17%, the fund has delivered a noteworthy 7.16% return in the past year.

Since its inception in 2013, the fund has consistently generated an average annual return of 6.83%, doubling invested capital approximately every 11 years. Diversifying across 91 holdings, mainly in low-risk government securities, the fund caters to those seeking a secure alternative to traditional banking for short-term investment.

ICICI Prudential Liquid Fund – Direct Plan

Fund Manager – Nikhil Kabra, Darshil Dedhia, Manish Banthia and Rohan Maru

It is a debt-oriented mutual fund with a moderate risk profile. As of January 11, 2024, its Net Asset Value (NAV) stands at ₹351.6682, reflecting a 5.26% return over the past 5 years. The fund primarily invests in money market securities (80% of the corpus) and high-quality debt instruments. With an AUM of ₹40,913 Cr, it follows a strategy to provide reasonable returns with low risk and high liquidity.

The riskometer indicates a moderate risk level. Investors should note the tax implications. Gains made before April 1, 2023, and sold within 3 years are taxed according to the applicable slab rate, while gains after 3 years are taxed at a rate of 20% with inflation indexation benefits. Overall, the ICICI Prudential Liquid Fund – Direct Plan is suitable for short-term savings solutions!

PGIM India Liquid Fund Annual Reinvestment Inc Dist cum Cap Wdrl

Fund Manager – Bhupesh Kalyani and Puneet Pal

PGIM India Liquid Fund Annual Reinvestment Inc Dist cum Cap Wdrl is an investment avenue with a low to moderate risk profile, focusing on Money Market – Liquid instruments. As of Jul 28, 2019, the fund’s Net Asset Value (NAV) stands at ₹144.7569, reflecting a marginal 0.02% change in a day. Over the past month, it has provided a return of 0.55%.

For investors, the minimum initial investment is ₹5000, and the fund maintains an expense ratio of 0.28%. Its performance is rated holistically, with a ranking of 157 out of 251 funds in its category. The fund follows an objective of generating steady returns coupled with high liquidity.

It’s noteworthy that the fund’s benchmark is CRISIL Liquid Debt B-I TR INR, and it falls under the AMC, PGIM India Asset Management Private Limited, managing assets worth ₹26,853.70 crores across various schemes.

Nippon India Ultra Short Duration Fund – Direct Plan

Fund Manager – Vivek Sharma

This fund is known to strategically invest in debt and money market instruments, ensuring a Macaulay duration between 3 to 6 months. Since its inception on December 7, 2001, the fund has showcased a CAGR of 6.00%. The benchmark, NIFTY Ultra Short Duration Debt Index B-I, provides a comparative metric, recording 7.71%, 5.52%, 6.18%, and 7.52% for the respective periods. Notably, the scheme’s value has grown from ₹10,000 to ₹36,040 since inception. The fund has faced a segregation of the portfolio impacting 5.43% NAV.

Checklist for the Best Liquid Fund?

Picking the right liquid fund doesn’t have to be complicated. Here’s a straightforward checklist to guide you:

• First, check if the fund invests in safety and includes top-rated securities.
• Look for funds that don’t charge too much in your current financial bandwidth. Investing more than you can may sound appealing, but what you take out of your current budget will come back to you later as debt.
• The urgency for cash can happen anytime, thus you want a fund that is easy and fast to sell.
• In the world of funds, bigger is better. Larger funds often mean more trusted returns.
• While history can’t predict the future, check if the fund has a habit of doing well. Consistency is key, so choose the one which is consistent with its profits.
• Some funds charge extra if you leave early. Go for funds with no surprise breakup fees – you should be free to go when you want.
• Think of the fund manager as the captain of your financial ship. Before picking one, check if they have a good track record.

Are Liquid Funds Risky?

To answer this question in short, yes, however, you do want to read the full answer to make a justified pros and cons list. While liquid funds are often seen as a secure choice for short-term investments, one must see its associated risks. Interest rate fluctuations, and liquidity challenges, albeit minor in the short term, can impact the Net Asset Value (NAV) of these funds.

On top of these, there’s a modest credit risk involved! Issues with the creditworthiness of underlying securities of liquid funds can affect overall performance. Regulatory changes and operational issues also contribute to the risk landscape.

Despite these considerations, liquid funds remain appealing for short-term gains. Investors should weigh these factors carefully in line with their risk tolerance and financial goals.

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