What Are Liquid Funds?
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Liquid Funds
Liquid Funds also known as Liquid schemes or money market schemes are a variant of debt schemes that invest only on short term debt securities. They can invest in debt securities of up to 91 days of maturity.
However, securities in the portfolio having a maturity of more than 60-days need to be valued at market prices [“marked to market” (MTM)]. Since MTM contributes to the volatility of NAV, fund managers of liquid schemes prefer to keep most of their portfolio in debt securities of less than 60-day maturity.
This helps in positioning liquid schemes as the lowest in price risk among all kinds of mutual fund schemes. Therefore, these schemes are ideal for investors seeking high liquidity with the safety of capital.
Also Read: Gilt Funds, Corporate Bond Funds
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Hi, I’m Managing Director at Gurpreet Saluja Financial Services where I help my investors to invest in mutual funds and achieve their financial goals. I’m also a Value Investor and here I write about Personal Finance & Investing.