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Liquid funds are suitable for:
✔ Retail Investors: Individuals looking for short-term parking of surplus funds.
✔ Corporates & Businesses: Companies with idle cash seeking better returns than a savings account.
✔ High Net-Worth Individuals (HNIs): Investors wanting quick liquidity with minimal risk.
✔ Institutions & Trusts: Organizations with short-term financial commitments.
Minimum Investment Amount
The minimum investment amount in a liquid fund varies by fund house.
It usually starts from ₹500 to ₹10,000, depending on the scheme.
Exit Charges of Liquid Funds
Redemption within 1 day: 0.0070%
Redemption within 2 days: 0.0065%
Redemption within 3 days: 0.0060%
Redemption within 4 days: 0.0055%
Redemption within 5 days: 0.0050%
Redemption within 6 days: 0.0045%
After 7 days: No exit load
Holidays for Liquid Funds
Liquid funds do not operate on market holidays. This includes:
✅ Saturdays & Sundays
✅ Stock Market Holidays (e.g., Republic Day, Independence Day, Diwali, etc.)
✅ Bank Holidays (as mutual funds rely on banking systems for transactions)
Daily NAV Change Example
Liquid funds offer daily NAV (Net Asset Value) updates based on returns earned on short-term debt instruments.
Example:
NAV on Day 1: ₹100.00
NAV on Day 2: ₹100.02 (+0.02%)
NAV on Day 3: ₹100.04 (+0.02%)
NAV on Day 4 (Holiday): No NAV update
NAV on Day 5: ₹100.06 (+0.02%)
Returns are usually in the range of 4%-7% annually, but they accumulate daily, making them ideal for short-term parking of funds.
Holding Papers or Security Instruments in Liquid Funds
Liquid funds invest in short-term debt and money market instruments, such as:
✔ Treasury Bills (T-Bills): Government-issued short-term debt securities.
✔ Commercial Papers (CPs): Short-term corporate borrowings.
✔ Certificates of Deposit (CDs): Fixed-term deposits issued by banks.
✔ Government & Corporate Bonds: Low-duration fixed-income securities.
✔ Repo & Call Money Market Instruments: Overnight borrowing and lending instruments.
These instruments provide liquidity and stable returns, making liquid funds a safe investment option.
