Best liquid mutual funds to invest in India 2024

Liquid mutual funds provide higher earnings than traditional savings accounts while carrying relatively lower risk. Investors can redeem their capital quickly whenever needed. This article analyses the top-performing liquid mutual funds to consider for investments in 2024. The funds featured have demonstrated a track record of providing stable returns through prudent investing in quality short-term instruments.

What are liquid funds?

Liquid funds let investors easily sell their investments whenever they want. They put money in short-term debt securities that can be quickly sold. Their value does not change much, and the invested money is relatively safe. They are ideal for people who want low-risk investment avenues and need quick access to their money. They work best for parking funds for 3-6 months and generating better returns than savings bank accounts.

Factors to consider when choosing a liquid fund

To identify the best liquid fund for your mutual fund investment needs, one should thoroughly research the following factors:

  • Credit quality: Review the portfolio and ensure investments are made in the highest-rated money market instruments.
  • Flexibility: Consider your investment horizon and redemption needs while choosing a fund.
  • Investment options: Most liquid funds allow both lumpsum investments and Systematic Investment Plans (SIPs) to offer flexibility depending on your cash flows.

Top liquid funds for 2024

The funds mentioned below are some of the best liquid funds to invest in for 2024 based on their consistent performance and risk-managed approach.

  • ICICI Prudential Liquid Fund

ICICI Prudential Liquid Fund is a liquid mutual fund scheme from ICICI Prudential Mutual Fund. This fund has been in existence for over a decade. ICICI Prudential Liquid Fund has ₹47,312 crore worth of Assets Under Management (AUM) as of May 31, 2024, and is a medium-sized fund in its category. The fund has an expense ratio of 0.29%, which is close to what most other liquid funds charge.

  • SBI Liquid Fund

The SBI Liquid Fund is managed by SBI Funds Management Limited, one of the largest mutual fund houses in India. This liquid fund has consistently been one of the top performers in its category, delivering strong and steady returns over various time periods due to its relatively large asset size, making it a stable option.

  • HDFC Liquid Fund

HDFC Liquid Fund is managed by HDFC Mutual Fund. This liquid fund has consistently delivered steady returns over the long term focusing on high-quality securities with the highest short-term credit ratings. It has featured among the top performers in its category for maintaining a good balance between returns and risk through conservative risk management.

  • Aditya Birla Sun Life Liquid Fund

Aditya Birla Sun Life Liquid Fund is managed by Aditya Birla Sun Life Mutual Fund, one of the largest fund houses in India. This liquid fund has consistently delivered steady returns with low risks, frequently featuring among the top-performing liquid funds through prudent portfolio selection focused on maintaining high liquidity.

Conclusion

Liquid funds are ideal short-term investment options for those seeking minimal risk with reasonable returns higher than bank savings accounts. Investing in top-performing liquid funds that have demonstrated consistent performance through different market cycles allows investors to generate optimal returns while maintaining high levels of liquidity and capital stability for their invested capital.