Liquid Funds
Last Updated on 11 May 2026
3 Year Average Returns
6.74%
Funds on Anand Rathi
230
Liquid Funds to Invest in 2026
| Fund Name | |||
|---|---|---|---|
| Aditya Birla SL Liquid Fund - Inst (IDCW-D) | 7.70% | 11.31% | 9.05% |
| Aditya Birla SL Liquid Fund - Inst (IDCW-W) | 12.15% | 12.11% | 8.89% |
| Aditya Birla SL Liquid Fund - Retail (IDCW-D) | 11.77% | 10.22% | 7.99% |
| Bandhan Liquid Fund - Regular (IDCW-D) | 8.07% | 9.02% | 7.87% |
| TRUSTMF Liquid Fund - Regular (IDCW-D) RI | 6.64% | 7.54% | 7.18% |
| Quant Liquid Plan (IDCW-W) | 5.82% | 8.60% | 7.00% |
| Navi Liquid Fund - Regular (IDCW-D) | 5.73% | 6.46% | 6.92% |
| UTI-Liquid Fund - Regular (IDCW-D) | 6.22% | 7.17% | 6.18% |
| Aditya Birla SL Liquid Fund (Discpln Advats Plan) | 6.54% | 7.18% | 6.17% |
| AXIS Liquid Fund (IDCW-D) | 6.15% | 6.84% | 6.16% |
| Bank of India Liquid Fund (IDCW-D) | 6.21% | 6.93% | 6.15% |
| DSP Liquidity Fund - Reg (IDCW-D) | 5.90% | 6.73% | 6.14% |
| Mahindra Manulife Liquid Fund - Regular (IDCW-D) | 6.25% | 7.01% | 6.13% |
| PGIM India Liquid Fund (IDCW-D) | 6.11% | 6.85% | 6.12% |
| JM Liquid Fund - (IDCW-W) | 6.77% | 7.04% | 6.11% |
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What Are Liquid Mutual Funds?
Liquid mutual funds are a type of debt mutual fund with securities having a maturity of up to 91 days. These short-term-driven funds invest primarily in short-term money market securities, including certificates of deposit, commercial papers, and Treasury bills.
These funds allow you to invest today and redeem your mutual fund investment whenever required. Accordingly, you can park your idle savings here (temporarily) and fulfill your short-term cash requirements.
Benefits of Investing in Liquid Mutual Funds
Liquid mutual funds offer a set of advantages to investors, including liquidity at their core.
Some key benefits of liquid mutual funds include;
High Liquidity
Investors can usually redeem their contributions within 24 hours on business days (T+1 basis), making these funds ideal for funding short-term financial goals or emergency finances.
No entry/exit load
With its high liquidity option, there is typically no entry or exit load applicable to investors for investments redeemed after 7 days.
Low Risk
Due to its limited time exposure, there is minimal credit and interest rate risk. Additionally, it's correlated with short-term securities as well.
No Lock-in Period
Unlike fixed deposits, the absence of a lock-in period in liquid funds provides greater flexibility for investors. One can redeem the funds whenever required.
Competitive Yield
Liquid funds have historically provided rates higher than typical savings account interest rates.
How Do Liquid Funds Work?
Since the entire concept of Liquid funds works on liquidity, the investment process also follows the same format.
Here's how liquid funds work!
Pooling of Money
The AMC collects money from multiple investors.
Short-Term Investments
The fund manager invests this pool only in short-term debt instruments like treasury bills, commercial papers, and certificates of deposit.
Up to 91-Day Limit
None of these instruments has a maturity beyond 91 days, which reduces risk from interest rate fluctuations. According to the scheme and fund strategy, the AMC will reinvest in other securities with the same maturity as debt securities — this method is known as "Rolling Maturity or Laddering."
Daily Earnings
These instruments generate steady interest income every day.
NAV Growth
The interest earned is added to the fund, so its Net Asset Value (NAV) increases slightly each day.
Easy Withdrawals
Since the investments are short-lived, you can redeem your money anytime within one working day.
Who Should Invest in Liquid Funds?
Liquid funds are suitable for:
- Individuals with Surplus Cash: Those who want to temporarily park extra money with an appreciated matured value over a savings account.
- Emergency Fund Builders: Those who want to establish or preserve an emergency fund with immediate access to funds.
- Risk-Averse Investors: Those seeking low-risk investment options for short-term goals.
How to Invest in Liquid Mutual Funds with Anand Rathi
Park your funds smartly. Withdraw whenever you want.
Here's how you can invest in liquid funds with Anand Rathi online platforms:
Seamless Onboarding
Open your mutual fund account on the ARInvest / Anand Rathi Mutual Funds app in minutes. (Already KYC’d? You’re ready to go.)
Choose Liquid Funds
Click on "Invest" --> Search for "Liquid Funds" and explore them. The list of liquid funds is filtered for safety, liquidity, and stable growth potential.
Invest Your Way
Start with a lump sum or set up a recurring investment (SIP) – whichever suits your cash flow.
Watch Your Investment Grow
Every day, your fund earns interest. That growth is reflected in the NAV, showing steady and transparent progress.
Redeem Anytime
Need cash? Redeem your units instantly and receive proceeds (often by next business day). No long lock-ins.
Factors to Consider Before Investing in Liquid Mutual Funds
Before investing in liquid funds, consider the following:
Expense Ratio
Lower expense ratios can enhance net yield.
Credit Quality
Ensure the fund invests in high-credit-quality instruments to minimise default risk.
Exit Load
Some liquid funds may charge a nominal exit load if redeemed within a specific period, usually up to 7 days.
Investment Horizon
Focus on investing idle funds, as liquid funds are designed for short-term investments.
Taxation Rules on Liquid Funds
Since these funds have a very low (less than a year) maturity, the short-term capital gains (STCG) are applicable.
For purchases made after April 1, 2023, capital gains from liquid funds will be taxed at the investor’s income slab rate, regardless of the holding period.
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