PPFAS Mutual Fund launched a new mutual fund scheme on 9th May 2018 – Parag Parikh Liquid Fund-Direct PlanThe NFO will open and close for subscription on May 9. The scheme will be managed by Mr. Raj Mehta.

It is open-ended, liquid type debt oriented mutual fund scheme. As the name suggests, these are the debt funds which can be easily converted in to cash that too within a day’s time.

The PPFAS Mutual Fund house, which operates only one scheme currently – the Parag Parikh Long Term Value Fund, has decided to launch a second scheme in response tounitholderss’ demands for alternate investment options, especially for the short-term needs.

Let’s look into this new NFO in detail.

Parag Parikh Liquid Fund-Direct Plan NFO: Facts

Liquid funds invest in highly liquid money market securities like Commercial Paper(CPs), Treasury Bills and Certificate of Deposit (CDs). They invest in instruments with a maturity period of up to 91 days.

NFO Name Parag Parikh Liquid Fund-Direct Plan NFO
NFO Launch Date 9th May, 2018
Last Date for Application 9th May, 2018
Minimum Investment Amount ₹5000 and in multiple of Re. 1 thereafter
Fund Type Debt – Liquid fund
Nature Open-ended fund
Mutual Fund House PPFAS Mutual Fund
Fund Manager Mr. Raj Mehta
Benchmark CRISIL Liquid

How to Invest in Parag Parikh Liquid Fund-Direct Plan NFO 2018

Log in to your Groww account. If you are a new user, sign up first– it is completely online and takes 2-3 working days. If you want to invest in Parag Parikh Liquid Fund-Direct Plan NFO, you have to follow the steps below.

  1. Decide the amount you would like to invest in Parag Parikh Liquid Fund-Direct Plan NFO.
  2. Email Groww support on support@groww.in with a request or call/Whatsapp on 9108800604.

When investing in this NFO, you must remember, it is an open-ended mutual fund.

Parag Parikh Liquid Fund-Direct Plan NFO: Objective

Parag Parikh Liquid Fund is an open-ended scheme whose primary investment objective is to deliver reasonable (non-guaranteed) market-related returns with lower risk and high liquidity through judicious investments in money market and debt instruments.

However, there is no assurance that the investment objective of the scheme will be realized and the scheme does not assure or guarantee any returns.

Parag Parikh Liquid Fund-Direct Plan NFO: Fund Category

Parag Parikh Liquid Fund-Direct Plan is a debt oriented mutual fund scheme. In debt fund category, it is liquid fund type.

Which means, this is a debt fund which can be easily converted in to cash that too within one or two working day (usually). Liquid funds invest in highly liquid money market securities like Commercial Paper(CPs), Treasury Bills and Certificate of Deposit(CDs).

They invest in instruments with a maturity period of up to 91 days. Among all debt funds, liquid funds provide most stable returns. Liquid funds are best-suited to investors having surplus amount lying idle in savings bank account and want to get better returns.

Hence, Parag Parikh Liquid Fund-Direct Plan is a suitable option for investors who are seeking a virtually zero-risk savings solution for short periods (usually, less than a year).

Also, Parag Parikh Liquid Fund-Direct Plan is an open-ended mutual fund scheme.

Open-ended funds are schemes that offer mutual fund units to the investors on a continuous basis. This means that the investors can buy units from, or sell units to the fund house at any time, thereby making the corpus of the fund variable. These funds also do not have a fixed maturity period.

Parag Parikh Liquid Fund-Direct Plan NFO: Plans Available

The scheme offers the following plans: Regular Plan and Direct Plan. 

Both the regular and direct versions of any mutual fund are the exact same fund, run by the same fund managers investing in the same stocks, and bonds.

The difference is that in case of direct mutual funds, there is no broker/distributor commission. Which means, as an investor, you get higher returns from the exact same mutual fund.

Read More: Direct vs Regular Mutual Funds Examples: Returns of Top 10 Funds Compared

These Plans further offers the following options:

  • Growth Option
  • Dividend Option

The frequency of dividend option is daily, weekly and monthly.

If no option is indicated in the application form the default option will be the Growth Option.

Parag Parikh Liquid Fund-Direct Plan NFO: Asset Allocation

The asset allocation of this liquid fund is as follows:

Type of Instruments Normal Allocation (% of Net Assets) Risk Profile
Money Market instruments (including cash, repo, CPs, CDs, Treasury Bills, CBLO and Government Securities with maturity/residual maturity up to 91 days) 80-100 % Low
Debt instruments (including Floating rate debt instruments and securitised debt with maturity/residual maturity up to 91 days) 0-20 % Low to Medium

Parag Parikh Liquid Fund-Direct Plan NFO: Benchmark

The fund will be benchmarked to CRISIL Liquid.

CRISIL Liquid Fund Performance Index seeks to track the performance of the liquid funds in India.

Features and Characteristics of CRISIL Liquid Index are:

  1. Base date for the Index: April 01, 2000.
  2. Total Return Index, adjusted for corporate action in the mutual fund schemes
  3. Index portfolio marked-to-market on a daily basis using Adjusted Net Asset Value (NAV)
  4. Liquid funds which are ranked under CRISIL Mutual Fund ranking are part of the index.
  5. Index values are calculated on daily basis using the chain-link method.

Parag Parikh Liquid Fund-Direct Plan NFO: Fund Manager

This fund will be managed by Mr. Raj Mehta. 

Education: Mr. Mehta is a B.Com and M.Com from Mumbai University, CA and CFA Level III Pass.

Experience: Prior to joining PPFAS AMC as a Research Analyst he was associated with the AMC as an intern since 2012. He has over 3 years of experience in investment research.

Funds Managed:

Parag Parikh Long Term Equity Fund (PPLF) – since Jan 2016.

Parag Parikh Liquid Fund-Direct Plan NFO: Minimum Investment

The minimum investment that can be made per investor in this NFO is ₹5000 and in multiples of ₹1 thereafter.

The minimum amount for monthly SIP, ₹1,000 and in multiple of ₹1 thereafter.

Minimum unit holder’s account balance or minimum amount of application at the time of STP enrollment in the Scheme should be ₹6000.

Minimum unit holder’s account balance or minimum amount of application at the time of SWP enrollment in the Scheme should be ₹12000.

Parag Parikh Liquid Fund-Direct Plan NFO: Risk

Parag Parikh Liquid Fund-Direct Plan NFO falls in the low-risk category as per the company scheme information document indicating that the principal invested by the investors will be at low risk.

Debt funds invest the money in government or private firms’ bonds. They are fixed income instruments and hence considered to be safe like the fixed deposits. Though the risk that they carry is slightly higher than fixed deposits, it is almost negligible.

While it is true to say that debt funds are relatively safer than equity funds, but they are not risk-free like the way bank fixed deposits (FDs) are. Still, debt funds are the best option for an investor with a low-risk appetite.

The risk in debt funds comes from different sources and three most important risks are as follows:

  1. An interest rate risk: The risk due to change in interest rate, where your fund manager takes the wrong call on interest rates. Suppose your fund manager expects the rates to rise and managed his portfolio accordingly, but actually rates went down, your investment will be unfavorable as compared to others who took the right call in terms of interest rates.
  2. Credit risk: The risk of default by the fund house or borrower. They are supposed to invest in debt fund that is rated high on investment grade by credit rating agencies. But sometimes fund houses invest in lower-rated debt papers than the safest paper in the market. The value of debt fund suffers putting a big redemption pressure when things go wrong for the fund house.
  3. Lack of liquidity: The risk of lack of a market to sell funds, when you want to exit. Liquidity in non-government Indian bond market is low and fund manager may not get enough buyers to sell funds in distress.

But remember, in general, debt mutual funds are relatively safer than equity mutual funds. Debt funds are sought after by the people who want stable returns with lower risks and volatility as compared to equity mutual funds.

Parag Parikh Liquid Fund-Direct Plan NFO: Salient Features

Some of the salient features of this funds are:

  1. The NFO will open and close for subscription on the same day i.e.on 9th May 2018. The Scheme is slated to reopen on May 14, 2018.
  2. There is no entry and exit load in the scheme.
  3. The Scheme shall invest in debt and money market securities with a maturity of up to 91 days only. In case of securities with put and call options (daily or otherwise), the residual maturity shall not be greater than 91 days.
  4. It is only the second mutual fund scheme by its fund house – PPFAS mutual fund.

Parag Parikh Liquid Fund-Direct Plan NFO: AMC Details

PPFAS Mutual Fund has assets under management (AUM) of about Rs 905 crore at the end of October 2017.

Challenging the status quo of the Indian mutual fund industry, PPFAS Mutual Fund, promoted by Parag Parikh Financial Advisory Services, held its first unit holders meet in Mumbai on 22 November 2014. PPFAS MF previously held the Annual General Meeting (AGM) of its unitholders in Chennai and Bangalore.

According to the fund house, it does not launch new schemes to take advantage of the bull run and wants to be transparent and accountable to its unit holders.

Till now it offered only one mutual fund scheme – Parag Parikh Long Term Equity Fund (PPLF)

PPFAS Long Term Value Fund and the scheme has gathered a corpus of ₹500 crore, with around 2,900 unitholders, which is higher than almost 60% of the equity diversified mutual fund schemes in existence.

PPFAS mutual fund house may have instilled some amount of trust by providing accountability to their investors

Key Reasons to Invest in Parag Parikh Liquid Fund-Direct Plan NFO

The key advantages of PPLF are:

  1. It is a credible alternative to bank fixed deposits, enabling you to invest to deploy money for short periods.
  2. It is a good option for those seeking a highly liquid option with no exit load.
  3. You could use the proceeds from Parag Parikh Long Term Equity Fund (PPLF) to systematically undertake transfers or Switches into other scheme/s offered by PPFAS Mutual Fund.

Hence, Parag Parikh Liquid Fund-Direct Plan NFO is a suitable option for investors who are seeking a virtually zero-risk savings solution for short periods (usually, less than a year).

Other Options

If you think Parag Parikh Liquid Fund-Direct Plan NFO is too risky for you, you can invest in already existing liquid funds.

3 best liquid funds available in the market to invest in 2018 are :

1. Principal Cash Mgmt Fund

This is a liquid fund launched on January 1, 2013. It is a debt fund with very low risk and has given a return of 8.24% since its launch.

Returns per annum over the years from this fund are:

Duration Returns
1 year  6.95%
3 years  7.49%
5 years  8.18%

Invest in Principal Cash Mgmt Fund Now

Rating by Groww 5 star
AUM (Fund Size) ₹1,271 Cr
Minimum SIP Not Supported
Minimum SWP ₹500
Performance w.r.t its Benchmark Has consistently outperformed its benchmark Crisil Liquid since its launch.
Age of the fund 5 years old
Expense Ratio 0.15%
Exit Load NIL
Type  Open-ended

2. Indiabulls Liquid Fund

This is a liquid fund launched on January 1, 2013. It is a debt fund with very low risk and has given a return of 8.29% since its launch.

Returns per annum over the years from this fund are:

Duration Returns
1 year  6.92%
3 years  7.58%
5 years  8.23%

Invest in Indiabulls Liquid Fund Now

Rating by Groww 5 star
AUM (Fund Size) ₹4,541 Cr
Minimum SIP ₹1,000
Minimum SWP ₹500
Performance w.r.t its Benchmark Has consistently outperformed its benchmark Crisil Liquid since its launch.
Age of the fund 5 years old
Expense Ratio 0.07%
Exit Load NIL
Type  Open-ended

3. Essel Liquid Fund

This is a liquid fund launched on January 1, 2013. It is a debt fund with very low risk and has given a return of 8.34% since its launch.

Returns per annum over the years from this fund are:

Duration Returns
1 year  6.97%
3 years  7.55%
5 years  8.29%

Invest in Essel Liquid Fund Now

Rating by Groww 4 star
AUM (Fund Size) ₹417 Cr
Minimum SIP Not Supported
Minimum SWP ₹1,000
Performance w.r.t its Benchmark Has consistently outperformed its benchmark Crisil Liquid since its launch.
Age of the fund 5 years old
Expense Ratio 0.07%
Exit Load NIL
Type  Open-ended

Remember don’t just run for returns from investment for investing in mutual funds. There are a lot of factors you should look into before selecting a fund which will match your investment goals.

Following the 3 things you should always remember before investing in Mutual Funds :

  1. Don’t blindly invest in the fund with the highest returns. Invest based on the duration you want to invest for.
  2. Every person’s financial condition is different. Evaluate the funds you invest in yourself – don’t invest in a fund because of its popularity.
  3. Review your investment from time to time but not too often. Once a few weeks is good enough.

Read More: 10 Tips on Investing in Mutual Funds

To look at some of the best performing funds from every category of mutual funds, check out Groww 30 best mutual funds to invest in 2018.

Happy Investing!

Disclaimer: the views expressed here are of the author and do not reflect those of Groww.