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Liquid Mutual Fund Schemes

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Liquid mutual funds are good investment tools when the investment horizon is for one or few days.

These are often the chosen instruments to invest by corporates to temporarily park their money.

Retail investors can use these schemes to make a lumpsum investment and then do a Systematic Transfer Plan to a chosen targeted equity scheme.

Liquid scheme selection

Being a retail investor, I generally prefer a liquid fund from an AMC that I hardly use for my other financial goals.

Because of this, I will avoid DSPBR, ICICI Pru, Franklin Templeton etc.

Further, returns from most liquid funds are close because of the similarity in the underlying assets.

Another important consideration is you need to be sure about your holding period.

Liquid, Treasury and Ultra-short term funds almost have the same lockin and returns depending on the AMC.

That said, my Liquid fund picks are:

Indiabulls Liquid Fund

JM High Liquidity Fund

Birla Sun Life Floating Rate Fund - Short Term Plan

Peerless Liquid Fund

As usual, go for Direct Plan - Growth Option

Liquid Fund Redemptions

Question: Generally, when I give a redemption request today, when will get the funds in my bank account?

Liquid funds are used for investing for one or few days and hence provide high liquidity.

If the investor gives a redemption request before the cut-off time (usuall 1 PM Noon) of the transaction day, he is likely to get the funds on T+1 day i.e on the next bank working day.

The funds will usually be sent by NEFT and hence the next day morning, when the redemption is processed, we would get an email with details about the NEFT transfer.

The process is same irrespective of offline or online transction and irrespective of where it is given i.e MyCAMS, KarvyMFS, Mutual fund website, MF Utilities or distributor websites (such as ICICIDirect)