Liquid funds are often used as temporary money parking avenues. More so by corporates. But many retail investors, too, invest in liquid funds for building an emergency corpus. Or, they may use these funds as a temporary vehicle and move the proceeds to equity schemes when markets correct. Be that as it may, the top five liquid funds manage a massive amount of assets. Returns have been modest, at 3-4 percent over the last one year. These funds invest in treasury bills and short-term papers of companies with the highest credit ratings. Here are the five largest liquid funds. Data from Valueresearch.
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SBI Liquid fund is the largest in its category, with a whopping Rs 59,176 crore in assets under management. The fund charges an expense ratio of 0.28 percent. The fund delivered 3.2 percent returns in the last one year.
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HDFC Liquid fund is the second in the list and has Rs 54,450 crore in assets. Its expense ratio is 0.3 percent. The fund delivered 3.1 percent returns in the last one year. In addition to safe government debt, the fund also has exposures to short-term papers issued by corporates with the highest credit ratings.
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Third in the list of largest in the category is ICICI Prudential Liquid fund, with assets of Rs 41,512 crore. The fund gave 3.2 percent returns in the last one year and charges an expense ratio of 0.32 percent. In addition to RBI treasury bills, the funds invests in certificates of deposits and commercial papers of top-rated corporates and banks.
Kotak Liquid fund is the next in the list with Rs 33,195 crore in assets. The fund delivered 3.2 percent returns in the last one year. It carries an expense ratio of 0.32 percent.
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Aditya Birla Sun Life Liquid fund is the fifth largest with Rs 32,671 crore in assets. It charges 0.33 percent as expense ratio and delivered 3.2 percent returns in the last one year.
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These funds are not our recommendations. Liquid schemes have delivered lukewarm returns compared to other safer debt fund categories such as short duration and ultra-short duration. Given the low interest rates in the economy, debt funds have not been able to deliver inflation beating returns. Liquid funds may be good options for systematic transfer plans to equity schemes. But do you need liquid funds at all among debt categories? May be not. Go through our MC30 rankings to choose the best of debt funds or take the help of an advisor.
