If you are a beginner or an intermediate investor in India, you might have heard about liquid plus funds. These funds are a type of debt mutual funds that invest in short-term debt instruments such as treasury bills, commercial papers, and certificates of deposit. Liquid plus funds are considered to be a safe investment option with low risk and moderate returns. In this comprehensive guide, we will discuss everything you need to know about investing in liquid plus funds in India.
What are Liquid Plus Funds?
Liquid plus funds are a type of debt mutual fund that invests in short-term debt instruments with a maturity period of up to 91 days. These funds are also known as ultra-short-term funds or cash funds. Liquid plus funds are considered to be a safe investment option as they invest in high-quality debt instruments with low credit risk. These funds offer moderate returns with low volatility.
Who should invest in Liquid Plus Funds?
Liquid plus funds are suitable for investors who are looking for a safe investment option with low risk and moderate returns. These funds are ideal for investors who have surplus cash and want to park their money for a short period of time. Liquid plus funds are also suitable for investors who want to diversify their portfolio and reduce the overall risk.
Benefits of Investing in Liquid Plus Funds
1. Low Risk: Liquid plus funds invest in high-quality debt instruments with low credit risk. These funds are considered to be a safe investment option with low risk.
2. Moderate Returns: Liquid plus funds offer moderate returns with low volatility. These funds are ideal for investors who are looking for a safe investment option with moderate returns.
3. Liquidity: Liquid plus funds offer high liquidity as investors can redeem their units at any time without any exit load.
4. Tax Efficiency: Liquid plus funds are tax-efficient as they are treated as debt funds for tax purposes. Long-term capital gains are taxed at 20% with indexation benefit, and short-term capital gains are taxed at the investor's slab rate.
How to Invest in Liquid Plus Funds?
Investing in liquid plus funds is easy and can be done through various channels such as online platforms, mobile apps, and offline modes. Here are the steps to invest in liquid plus funds:
1. Choose a Fund: The first step is to choose a liquid plus fund that suits your investment objective and risk profile. You can compare the performance of different funds on various online platforms and choose the one that meets your requirements.
2. KYC Compliance: To invest in liquid plus funds, you need to complete the KYC compliance process. You can complete the KYC process online or offline by submitting the required documents.
3. Investment Amount: You can invest in liquid plus funds with a minimum investment amount of Rs. 5000. You can invest through lump sum or SIP mode.
4. Redemption: Liquid plus funds offer high liquidity, and you can redeem your units at any time without any exit load. The redemption amount will be credited to your bank account within 1-2 working days.
Top Liquid Plus Funds in India
Here are some of the top liquid plus funds in India based on their performance:
1. Aditya Birla Sun Life Liquid Fund
2. HDFC Liquid Fund
3. ICICI Prudential Liquid Fund
4. Nippon India Liquid Fund
5. SBI Magnum Liquid Fund
6. UTI Liquid Fund
7. Kotak Money Market Fund
8. IDFC Cash Fund
9. Franklin India Liquid Fund
10. DSP Liquidity Fund
Conclusion
Liquid plus funds are a safe investment option with low risk and moderate returns. These funds are suitable for investors who have surplus cash and want to park their money for a short period of time. Liquid plus funds offer high liquidity and tax efficiency. Investing in liquid plus funds is easy and can be done through various channels. Before investing, it is important to choose a fund that suits your investment objective and risk profile.
