Final Up to date on Apr 22, 2025 by Aishika Banerjee
Liquid funds occupy a particular area of interest in India’s debt-mutual-fund panorama, providing a low-duration avenue for parking surplus money with out locking it into conventional fixed-income merchandise. Regulated by SEBI as a class of debt schemes that put money into money-market and short-term devices with residual maturities of as much as 91 days, these funds intention to mix excessive liquidity with comparatively low volatility. This text will discover the highest liquid funds, taxation, components and extra.
Finest Liquid Funds in India – Up to date April 2025
Be aware: The above data is dated twenty second April 2025. The parameters used to filter the record of high flexi cap funds on Tickertape’s Mutual Fund Screener are:
- Class > Debt > Liquid Fund
- Plan – Development
- 5Y CAGR: Set excessive to low
Overview of the Prime Liquid Funds in India
Quant Liquid Plan
Quant Liquid Plan is a short-term debt mutual fund by Quant Mutual Fund, specializing in investing in cash market devices with excessive liquidity and minimal danger. It goals to offer optimum returns for traders looking for a protected, low-duration funding various with fast redemption choices and steady earnings era.
Aditya Birla SL Liquid Fund
Aditya Birla Solar Life Liquid Fund provides a low-risk, high-liquidity funding possibility. Managed by Aditya Birla Solar Life AMC, it invests in short-term debt devices like treasury payments and certificates of deposit, catering to traders on the lookout for capital preservation and higher returns than financial savings accounts.
Mahindra Manulife Liquid Fund
Mahindra Manulife Liquid Fund supplies a safe funding avenue with excessive liquidity, concentrating on short-term cash market devices. Managed by Mahindra Manulife Funding Administration, it goals to satisfy traders’ wants for capital safety and environment friendly money administration by way of a diversified portfolio of low-risk debt securities.
PGIM India Liquid Fund
PGIM India Liquid Fund, managed by PGIM India Mutual Fund, invests in high-quality debt and cash market devices. It’s designed for conservative traders looking for a protected place to park funds for brief durations, providing every day liquidity and steady returns with minimal rate of interest danger.
Edelweiss Liquid Fund
Edelweiss Liquid Fund, from Edelweiss Mutual Fund, is designed for short-term traders who prioritise liquidity and capital preservation. It invests in low-duration devices resembling treasury payments and industrial papers, providing easy accessibility to funds whereas sustaining a conservative funding profile with constant short-term yields.
Union Liquid Fund
Union Mutual Fund manages the Union Liquid Fund and invests in a mixture of short-term debt and cash market devices. It caters to traders looking for rapid liquidity, low volatility, and capital security, making it an appropriate various to conventional financial savings devices.
Axis Liquid Fund
Axis Liquid Fund, operated by Axis Mutual Fund, is designed for traders looking for low-risk investments with excessive liquidity. It focuses on high-credit-quality cash market devices and short-duration debt securities, making it a perfect possibility for short-term parking of surplus funds.
Nippon India Liquid Fund
Nippon India Liquid Fund, from Nippon India Mutual Fund, targets low-duration debt devices to supply excessive liquidity and steady returns. It fits traders who prioritise capital preservation and fast entry to funds, appearing as a versatile monetary buffer or short-term financial savings software.
Mirae Asset Liquid Fund
Mirae Asset Liquid Fund is a short-term debt fund provided by Mirae Asset Mutual Fund, which invests in high-quality cash market devices. It’s meant for conservative traders looking for capital preservation, every day liquidity, and returns barely above conventional financial savings strategies, making it perfect for deploying non permanent surpluses.
Financial institution of India Liquid Fund
Financial institution of India Liquid Fund, managed by BOI AXA Mutual Fund, provides a low-risk funding answer by way of short-term debt and cash market devices. It focuses on sustaining excessive liquidity and capital security, catering to traders who search environment friendly money administration and a steady, short-duration funding possibility.
What are Liquid Funds?
Liquid mutual funds for short-term and long-term are also called money-market funds. They guarantee excessive liquidity to the traders by investing their capital in short-term debt devices and cash market securities. They’re thought of safe funding devices due to the excessive credit standing of cash market devices and the minuscule danger of shedding the invested capital.
Among the devices that represent a liquid fund’s portfolio embrace certificates of deposits (CDs), company bonds, treasury payments (T-bills), debentures, industrial paper, and extra.
Who Can Spend money on Liquid Funds?
The returns provided by liquid funds are increased than that of an everyday financial savings account. In case you are an Indian and have an account with an Indian financial institution, then you possibly can put money into liquid funds after finishing your Know Your Buyer (KYC) formalities. In case you might be an NRI, you can too put money into Indian liquid funds so long as you adhere to the Overseas Change Administration Act (FEMA).
Typically, traders select liquid funds for a short-term funding plan. Another excuse to decide on liquid funding funds is that in addition they supply indexation advantages. Subsequently, whether or not or not you must put money into the very best liquid funds for funding depends upon your monetary targets and different components!
Components to Think about Earlier than Investing in Liquid Funds
Listed here are some essential features that you will need to take into account earlier than investing in liquid funds in India:
Dangers
Even the very best liquid mutual funds don’t expertise plenty of volatility. Therefore, the online asset worth (NAV) of the fund stays nearly regular. Nevertheless, if the credit standing of any underlying safety drops, then there’s a risk that the NAV can expertise a drop, too.
Returns
Relating to numbers, financial savings accounts in India have a return fee of ~4%. Whereas a liquid fund provides you round 4-8% returns on common. Subsequently, take into account the liquid fund returns if you find yourself planning to put money into high-return liquid funds.
Exit load
It’s crucial to notice that although liquid funds may be redeemed anytime, an exit load would apply in the event you redeem the funds inside the first seven days. This would scale back the online earnings from the fund.
Expense ratio
Liquid funds cost an annual payment known as an expense ratio for fund administration companies. This can be a share of the entire property of the fund. Therefore, this is among the vital components to think about when selecting a liquid fund.
Funding plan
Earlier than investing in any instrument, ensure you have a correct funding plan. Many traders use liquid funds to create an emergency fund, providing increased liquidity whereas giving affordable returns at decrease danger.
Taxation on Liquid Funds in India
Liquid mutual funds India are taxed as debt funds in India. Understanding the most recent tax rules on debt mutual funds is essential for successfully managing your investments. The Union Price range 2024 has launched vital modifications to the taxation of debt mutual funds. Here’s a detailed breakdown of the brand new tax guidelines:
Quick-Time period Capital Positive aspects (STCG)
When you promote your liquid mutual fund choices inside three years (36 months), the positive factors from these investments are thought of short-term capital positive factors. In accordance with the brand new funds, these positive factors can be taxed in keeping with your earnings tax slab fee.
Lengthy-Time period Capital Positive aspects (LTCG)
For tax-efficient liquid funds held for over three years (36 months), the positive factors are categorised as long-term capital positive factors. The important thing factors to notice underneath the brand new funds are:
- Tax Charge: The tax fee for long-term capital positive factors on liquid fund schemes is now a flat 12.5%, whatever the quantity of acquire.
- No Indexation Profit: The advantage of indexation, which beforehand allowed traders to regulate the acquisition value of their property for inflation, has been eliminated for debt funds. Because of this the complete acquire from promoting a debt fund after three years can be taxable on the flat fee of 12.5%.
Abstract
| Capital Positive aspects Tax | Description |
| Quick-Time period Capital Positive aspects (STCG) | When you promote your debt fund models inside three years (36 months), the tax can be as per your earnings tax slab. |
| Lengthy-Time period Capital Positive aspects (LTCG) | For debt funds held for over three years (36 months), the tax fee is now a flat 12.5% with out indexation advantages. |
Conclusion
Liquid Funds are low-risk funding devices with higher returns for a short-term funding plan. Whether or not to put money into short-term liquid funds relies upon fully in your monetary targets. Nevertheless, earlier than investing, seek the advice of your monetary advisors and tailor your portfolio for danger tolerance and market volatility. It can save you your efforts and time by utilizing Tickertape’s Mutual Fund Screener to seek out the very best mutual fund primarily based in your danger tolerance and funding preferences!
Steadily Requested Questions About Liquid Funds
1. The right way to put money into liquid funds?
Investing in low-risk liquid funds is much like investing in some other mutual fund. You should use Tickertape Mutual Fund Screener to seek out the very best funds that fit your funding wants. When you’ve chosen the very best mutual fund, you possibly can go to their web site and make investments. After investing within the mutual fund, you need to use the Tickertape Portfolio to continuously monitor the liquid mutual funds efficiency of the fund.
2. What are the highest 5 liquid funds in 2025?
The highest 5 liquid funds primarily based on 5Y CAGR are
– Quant Liquid Plan
– Aditya Birla SL Liquid Fund
– Mahindra Manulife Liquid Fund
– PGIM India Liquid Fund
= Edelweiss Liquid Fund
Be aware: These are curated from Tickertape Mutual Fund Screener and as of twenty second April 2025. The funds are derived primarily based on the 5-yr CAGR. You should use your most well-liked parameters like 3yr-CAGR, Absolute Returns – 3M, and so on., to get the highest liquid funds.
