After giving abysmal returns for over two years, liquid funds are back in the reckoning. These schemes invest in securities of up to 91 days maturity. The average 1-year return of the category has improved of late. Experts attribute this to the yields of short-term debt-instruments (wherein the liquid funds invest the most) moving up in response to the RBI's measures on liquidity management. Fund managers expect further increase in short term rates going ahead with the possible rate hike by RBI to get inflation under control. This is good news for liquid funds.