Best Liquid Mutual Funds

Liquid Funds invest in debt securities with very short maturities of up to 91 days (like lending to banks, short term govt. bonds and very short-term corporate paper). They provide full flexibility of anytime liquidity and earn returns in the form of interest for the holding period. They are highly secure due to kind of entities (Govt., Banks, Top Corporates (Small amount)). A number of corporates use liquid funds for their treasury management.

These invest in short term (90 days) bonds and other similar instruments. One can use them as an emergency fund. These are meant for parking your money and keep it handy so that you can redeem it as and when required. Returns are taxed as per your income tax slab if sold before three years.

Purpose: Invest in these funds if you want to park your money as an emergency fund, and redeem as per need.

Top 10 Liquid Mutual Funds

Fund NameCategoryRisk1Y ReturnsRatingFund Size(in Cr)
ICICI Prudential Liquid FundDebtLow7.3%5star47,684
Indiabulls Liquid FundDebtLow7.3%5star3,423
Essel Liquid FundDebtLow7.4%4star1,029
HSBC Cash FundDebtLow7.3%4star4,744
Tata Liquid FundDebtLow7.3%4star20,893
JM Liquid FundDebtLow7.3%4star2,393
Axis Liquid FundDebtLow7.4%4star23,435
Invesco India Liquid FundDebtLow7.3%4star0
Canara Robeco Liquid FundDebtLow7.3%3star1,250
DHFL Pramerica Insta Cash FundDebtLow7.3%3star6,052
DSP BlackRock Liquidity FundDebtLow7.4%3star17,770
HDFC Liquid FundDebtLow7.2%3star52,806
Taurus Liquid FundDebtLow5.7%3star33
Mirae Asset Cash Management FundDebtLow7.3%3star867
Edelweiss Liquid FundDebtLow7.4%3star2,552
View All Top 10 Liquid Mutual Funds

Let's have a closer look

Now let us jump and check about these top 10 mutual fund schemes.

ICICI Prudential Liquid Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Liquid segment and provided 7.28% annualized returns in the last 3 years. In the last 1 year, it gave 7.29% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 7.29% returns in the last 1 year. Groww rated this fund as 5 Star. This is one of the best Debt mutual fund in India.

Fund Manager: Rahul Goswami, Rohan Maru

Launch Date31 Dec 2012
Min Investment Amt100
Groww Rating5star
AUM47,684Cr
1Y Returns7.3%

Indiabulls Liquid Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Liquid segment and provided 7.42% annualized returns in the last 3 years. In the last 1 year, it gave 7.29% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 7.29% returns in the last 1 year. Groww rated this fund as 5 Star. This is one of the best Debt mutual fund in India.

Fund Manager: Malay Shah

Launch Date31 Dec 2012
Min Investment Amt500
Groww Rating5star
AUM3,423Cr
1Y Returns7.3%

Essel Liquid Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Liquid segment and provided 7.44% annualized returns in the last 3 years. In the last 1 year, it gave 7.37% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 7.37% returns in the last 1 year. Groww rated this fund as 4 Star. This is one of the best Debt mutual fund in India.

Fund Manager: Killol Pandya, Archit Shah

Launch Date31 Dec 2012
Min Investment Amt1,000
Groww Rating4star
AUM1,029Cr
1Y Returns7.4%

HSBC Cash Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Liquid segment and provided 7.29% annualized returns in the last 3 years. In the last 1 year, it gave 7.35% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 7.35% returns in the last 1 year. Groww rated this fund as 4 Star. This is one of the best Debt mutual fund in India.

Fund Manager: Kapil Punjabi

Launch Date31 Dec 2012
Min Investment Amt10,000
Groww Rating4star
AUM4,744Cr
1Y Returns7.3%

Tata Liquid Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Liquid segment and provided 7.31% annualized returns in the last 3 years. In the last 1 year, it gave 7.33% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 7.33% returns in the last 1 year. Groww rated this fund as 4 Star. This is one of the best Debt mutual fund in India.

Fund Manager: Amit Somani

Launch Date31 Dec 2012
Min Investment Amt5,000
Groww Rating4star
AUM20,893Cr
1Y Returns7.3%

JM Liquid Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Liquid segment and provided 7.38% annualized returns in the last 3 years. In the last 1 year, it gave 7.35% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 7.35% returns in the last 1 year. Groww rated this fund as 4 Star. This is one of the best Debt mutual fund in India.

Fund Manager: Shalini Tibrewala

Launch Date31 Dec 2012
Min Investment Amt5,000
Groww Rating4star
AUM2,393Cr
1Y Returns7.3%

Axis Liquid Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Liquid segment and provided -100% annualized returns in the last 3 years. In the last 1 year, it gave 7.36% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 7.36% returns in the last 1 year. Groww rated this fund as 4 Star. This is one of the best Debt mutual fund in India.

Fund Manager: Devang Shah, Aditya Pagaria

Launch Date31 Dec 2012
Min Investment Amt500
Groww Rating4star
AUM23,435Cr
1Y Returns7.4%

Invesco India Liquid Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Liquid segment and provided -100% annualized returns in the last 3 years. In the last 1 year, it gave 7.33% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 7.33% returns in the last 1 year. Groww rated this fund as 4 Star. This is one of the best Debt mutual fund in India.

Fund Manager: Krishna Venkat Cheemalpati, Nitish Sikand

Launch Date31 Dec 2012
Min Investment Amt1,000
Groww Rating4star
AUM0Cr
1Y Returns7.3%

Canara Robeco Liquid Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Liquid segment and provided -100% annualized returns in the last 3 years. In the last 1 year, it gave 7.26% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 7.26% returns in the last 1 year. Groww rated this fund as 3 Star. This is one of the best Debt mutual fund in India.

Fund Manager: Suman Prasad, Girish Hisaria

Launch Date29 Mar 2016
Min Investment Amt5,000
Groww Rating3star
AUM1,250Cr
1Y Returns7.3%

DHFL Pramerica Insta Cash Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Liquid segment and provided -100% annualized returns in the last 3 years. In the last 1 year, it gave 7.33% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 7.33% returns in the last 1 year. Groww rated this fund as 3 Star. This is one of the best Debt mutual fund in India.

Fund Manager: Kumaresh Ramakrishnan, Kunal Jain

Launch Date31 Dec 2012
Min Investment Amt5,000
Groww Rating3star
AUM6,052Cr
1Y Returns7.3%

DSP BlackRock Liquidity Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Liquid segment and provided 7.32% annualized returns in the last 3 years. In the last 1 year, it gave 7.36% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 7.36% returns in the last 1 year. Groww rated this fund as 3 Star. This is one of the best Debt mutual fund in India.

Fund Manager: Kedar Karnik, Rahul Vekaria

Launch Date30 Dec 2012
Min Investment Amt1,000
Groww Rating3star
AUM17,770Cr
1Y Returns7.4%

HDFC Liquid Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Liquid segment and provided 7.22% annualized returns in the last 3 years. In the last 1 year, it gave 7.16% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 7.16% returns in the last 1 year. Groww rated this fund as 3 Star. This is one of the best Debt mutual fund in India.

Fund Manager: Anupam Joshi

Launch Date30 Dec 2012
Min Investment Amt5,000
Groww Rating3star
AUM52,806Cr
1Y Returns7.2%

Taurus Liquid Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Liquid segment and provided 4.71% annualized returns in the last 3 years. In the last 1 year, it gave 5.68% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 5.68% returns in the last 1 year. Groww rated this fund as 3 Star. This is one of the best Debt mutual fund in India.

Fund Manager: Dheeraj Singh

Launch Date31 Dec 2012
Min Investment Amt5,000
Groww Rating3star
AUM33Cr
1Y Returns5.7%

Mirae Asset Cash Management Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Liquid segment and provided 7.17% annualized returns in the last 3 years. In the last 1 year, it gave 7.33% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 7.33% returns in the last 1 year. Groww rated this fund as 3 Star. This is one of the best Debt mutual fund in India.

Fund Manager: Mahendra Jajoo

Launch Date31 Dec 2012
Min Investment Amt5,000
Groww Rating3star
AUM867Cr
1Y Returns7.3%

Edelweiss Liquid Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in Liquid segment and provided -100% annualized returns in the last 3 years. In the last 1 year, it gave 7.38% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 7.38% returns in the last 1 year. Groww rated this fund as 3 Star. This is one of the best Debt mutual fund in India.

Fund Manager: Gautam Kaul, Rahul Dedhia

Launch Date31 Dec 2012
Min Investment Amt5,000
Groww Rating3star
AUM2,552Cr
1Y Returns7.4%

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Can you save tax with Liquid Mutual fund?

If held for less than 3 years, capital gains would be added to investor’s income and taxed at his marginal rate of tax but compared to FD which is taxed annually these funds are taxed on exit.There are many Liquid Funds available in India that one can invest in but their performance is very similar. The most important feature we need to focus on while evaluating liquid funds is the lowest risk possible. In terms of returns, they provide very similar returns as FD and you can withdraw anytime without any penalty.

What are the parameters used for the best liquid fund?

Size of fund: 5k Cr+. Low Risk based on standard deviation of quarterly returns <0.2. Average returns: annual, quarterly (annualized) to be 8%+ net of expense ratio. Duration of portfolio to be < 1year. Excluded Institutional Plans. Exit load: Nil and Credit quality to be AA or plus.

Why opt for Liquid Funds?

Higher returns: Your hard earned money that lies in a savings bank account fetches you 4% interest per annum. However, the best liquid funds have returned as high as 8-9% on an average in the past 1-year period, daily, on an annualized basis. On returns alone, liquid funds score over a savings bank account. If you have a raise or a bonus coming your way, invest in liquid funds and party later. Even as compared to FD, the returns are higher in liquid funds. Look at the graph below for understanding how much the difference is costing you. Less Risks: Liquid funds are invested in government bonds and high credited companies. The risks are the lowest with you can get when you’re investing in the market. They are the least risky and least volatile among mutual funds Liquid funds are like parking lots, you park your money while you are out doing something important, and when you come back to it, it appears to be washed and waxed. Whenever you want, you get your money back, and the profits are striking. Easier tax implications: Your bank interest gets taxed at income tax rates (30.9% for the highest tax bracket; including surcharge). You need to collect TDS certificates, re-calculate taxes and submit it while filing returns. With Liquid funds, the interest income falls in Capital Gain income. In case it’s earned in less than 3 years, you need to pay tax, just like income. In case it’s after 3 years, i.e. its long term capital gain, the tax would be on interest earned after indexation. The overall tax rates come down to 8-9% instead of ~30% in case of FD for long term capital gain. So, you can constantly increase your money without getting as much tax cuts as in a fixed deposit. No lock-in period: There is no lock-in period when you invest in liquid funds. You can withdraw at any time without getting charged a penny. All you have to do is notify for the request. The withdrawals from these funds are processed within 24 hours (business days). The cut- off time for the withdrawals is set at 2 pm which basically means if a request is made within 2 pm on a business day then the funds will get credited to your bank account within the next business day by 10 am. The fixed deposits on another hand, charge you if you withdraw before the maturity. No entry and exit loads: There are certain funds that can be purchased without the sales charge and be withdrawn with no charges, cutting at your profits. Entry load is charged at the time an investor purchases the units of a scheme. Exit load is charged at the time of redeeming (or transferring an investment between schemes). Liquid funds are free from both.

Why are Liquid funds better than FDs?

Offer superior liquidity compared to bank FDs. Bank FDs would penalize you for premature withdrawal. Returns are generally better than FD returns with slightly higher risk profile.

What is the return in liquid funds?

Liquid funds have given returns in the range of 6-8% per annum. The returns given by liquid funds do not change much and are very stable. It is this stability that allows people to store money in liquid funds without worrying about market conditions or volatility.

How to invest in Liquid mutual funds on Groww?

One of the best ways to hedge against the small-cap volatility is to adopt a phased approach, also known as Systematic Investment Plan (SIP) approach. We are sure that you must be aware of SIP and its benefits. Buying in small quantity but buying regularly provides you with faster growth. On Groww.in, all transactions to and from AMC is done via BSE. When you decide to invest in a large cap mutual fund of your choice, you choose that mutual fund on the website and click ‘invest’. Following that, you are redirected to the BSE page where you make the payment. BSE then directs your money to the AMC managing your mutual fund. To be assured at your end, you can visit the individual AMC website after the payment. You would be able to see all your purchased units against your folio number.

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Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.
Past performance is not indicative of future returns. Please consider your specific investment requirements, risk tolerance, investment goal, time frame, risk and reward balance and the cost associated with the investment before choosing a fund, or designing a portfolio that suits your needs.
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