Liquid Fund Investment: Investors have reposed trust in liquid funds in debt mutual fund Kategiri, even after giving low returns in the era of corona virus epidemic. In the last month, April, a net investment of Rs 41507 crore has come in the liquid fund segment. There is a net investment of over 1 lakh crore in overall debt cutting. After all, when the returns of liquid funds are very low, then why did investors invest the most in this segment. On this, experts say that investors are still parking their money in liquid funds instead of greed, so that they can shift money slowly from here if the returns of equity improve.
Investment of Rs 41,507 crore in liquid fund
Talking about the last April, investment has been seen in every segment of debt funds. Net inflows of 41,507 crores in April in liquid funds, 20,287 crores in money market funds and overnight funds and net inflows of 18,492 crores, 9,322 crores in low durations funds, 1,246.52 crores in short durations funds and 8919 crores in ultra short durations funds. Inflow has come. While the floater fund has a net inflow of Rs 3,352 crore. At the same time there has been an outflow of 150.91 crores in Banking and PSU funds. Dynamic bond fund has the highest outflow of Rs 2,103.01 crore.
Why invest in liquid funds the most
AK Nigam, director of BPN Fincap, says that due to the second wave of COVID 19, investors are still taking a cautious approach. There remains a doubt about the equity market. Their fear has increased by seeing the fluctuations in the market in the past. Because of this, many investors are putting their money in liquid funds with a maturity period of 91 days. Actually, in liquid funds, you get more returns from savings account, while maturity is also 3 months only. It is expected that after 3 months stability will come in the market. In such a situation, investors will be able to easily withdraw money from liquid funds and shift to Equitbh. As far as returns are concerned, they will get more benefit from keeping money in savings account in liquid funds. Anyway, the trend now is that most of the investment is now being invested in debt funds that invest in fixed income securities. Among these, liquid funds have been the first choice of investors.
What are liquid funds?
Liquid funds are a subset of debt funds. Liquid funds invest in fixed income securities, which have a very short maturity period. The maturity of these securities is less than or equal to 91 days. They invest in government securities, certificates of deposit, treasury bills, commercial papers and other debt instruments. Among them, the risk is less compared to other categories of debt funds, while the liquidity is more. Liquid Fund is another name for Cash Fund and its objective is higher liquidity, lower risk and stable returns.
How much is the return
Liquid fund banks are popular among retail investors for their ability to offer higher returns than investments in fixed deposits or savings accounts. At the same time, their high liquidity makes them a better option for a savings account. If you look at the average returns of the last few years, liquid funds have given an average return of 3.25 per cent in the last 1 year, 5.29 per cent in 3 years and 6 per cent in 5 years.
Benefits of liquid funds
Liquid funds have a maturity of 91 days. There is no problem of liquidity among them. Investors get more interest from these savings accounts. At the same time, it also works like a savings account. Liquid funds are considered safe as they invest in bonds for short term. Liquid funds have the lowest risk of interest rate fluctuations, as they primarily invest in fixed income securities with short-term maturity.
The risk is less
In the case of liquid funds, the risk factor is low. This is because the securities they invest in have very low maturity. These funds offer steady returns, while other debt funds fluctuate according to the interest rate outlook. However, it is not that they are completely risk free. There is always a possibility of issuing debt security by default on the last payment.