A liquid fund is a good investment option for anyone who has surplus cash, which is not required for some time, lying idle in their bank account. This surplus cash can be easily invested in a liquid fund- which invests in safe money market instruments, thus earning you a return on your investment.
What makes liquid funds shine is that it doesn’t come with any lock-in period and hence, can be redeemed or liquidated easily.
When selecting a liquid fund, you must consider these four aspects:
- Returns
A fund’s performance plays a crucial role while selecting a fund. You must look for funds that have delivered consistent returns over different time horizons. Look for funds which have consistently outperformed the benchmark and peer funds.
- Expense ratio
This is the amount the fund house charges you for the services that they provide. A lower expense ratio means higher take-home returns for the investor. Thus, maximise your returns for opting a fund with a lower expense ratio.
- Fund history
Just like you get your jewellery made from a reputed and trustworthy jeweller, you need to invest your capital in a fund house which has a good track record of consistent performance.
A few good liquid funds you can consider are:
- Aditya Birla Sun Life Floating Rate Fund
- L&T Liquid Fund
- Aditya Birla Sun Life Cash Plus
- UTI Liquid Cash Fund
- Axis Liquid Fund
- Baroda Pioneer Liquid Fund
- BOI AXA Liquid Fund