Best Liquid Funds to invest in 2020
Liquid funds are quite heavily invested when compared to other debt funds. As of June 2020, it contributes 37 per cent of the debt funds’ assets under management (AUM) and 17 per cent of the total industry’s AUM. Now you might be wondering as to why liquid funds have such a large AUM size? This is because large corporations have more retail investors. These companies divert their excess cash towards liquid funds because they are highly liquid, offer the safety of capital and better returns than a savings bank account (4 per cent). Though in terms of safety, they are not as safe as bank fixed deposits or savings bank account. Hence, if near term liquidity is what you are looking for, then do consider parking your money in liquid funds. In this article, we have listed the best liquid funds that you can invest in.
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Top 5 Best Liquid Funds in 2020
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Liquid Funds
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AUM
(Rs crore)
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Expense Ratio (per cent)
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Returns (per cent)
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1 Week
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1 Month
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3 Month
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6 Month
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1 Year
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SBI Liquid Fund
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50,761.50
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0.26
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0.06
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0.27
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0.99
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2.44
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5.27
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Axis Liquid Fund
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27,032.10
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0.22
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0.06
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0.27
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0.98
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2.51
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5.38
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UTI Liquid Cash Plan
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27,080.70
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0.25
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0.06
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0.27
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0.99
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2.42
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5.27
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Nippon India Liquid Fund
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30,603.70
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0.28
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0.06
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0.28
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1.03
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2.51
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5.40
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HDFC Liquid Fund
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99,867.10
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0.30
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0.06
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0.26
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0.95
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2.40
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5.20
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AUM & Expense Ratio as on June 30, 2020. Returns areas on July 27, 2020
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It is important to understand that while investing in liquid funds, never look at the returns generated by the fund. As liquid funds are meant to provide liquidity in the near term along with safety, it would be more prudent to check its AUM, expense ratio, and the quality of paper it holds. Never invest in liquid a fund that holds below AAA-rated papers. Also, make it a point to invest in liquid funds with a low expense ratio and AUM of not less than Rs 20,000 crore.