A brief look at NAV and returns in liquid mutual funds
Liquid funds are a category of mutual funds known for their relatively low/low-to-moderate risk profile, high liquidity, and potentially stable returns. Understanding key metrics like Net Asset Value (NAV) and returns in liquid funds is crucial for investors seeking short-term investments.
This article explores liquid mutual funds along with their NAV and returns. We also discuss the Bajaj Finserv Liquid Fund and its suitability for various types of investors.
- Table of contents
- What are liquid mutual funds?
- Brief look at NAV and returns in liquid mutual funds
- Why choose Bajaj Finserv Liquid Fund?
- Who should invest in liquid mutual funds?
- How to invest in liquid mutual funds?
- FAQ
What are liquid mutual funds?
Liquid funds are open-ended debt mutual funds that primarily invest in short-term money market instruments, treasury bills, certificates of deposit, and other debt securities with a maturity period of up to 91 days. These funds offer high liquidity and relative stability while aiming for moderate yet potentially consistent returns.
Liquid funds cater to investors seeking low-risk investment avenues for short-term financial goals or for parking surplus funds. Due to their short-term nature and investment in highly liquid assets, liquid funds prove to be an alternative to traditional savings instruments.
Brief look at NAV and returns in liquid mutual funds
Understanding NAV (Net Asset Value)
NAV, or Net Asset Value, represents the per-unit value of a mutual fund scheme. For liquid funds, NAV is calculated daily and denotes the market value of the fund's underlying securities. Liquid funds generally maintain a relatively stable NAV per unit due to their investment in short-term debt instruments that mitigate market volatility.
Returns in liquid funds
Liquid funds focus on liquidity, offering a moderate yet relatively stable return potential. These funds invest in low/low-to-moderate risk money market instruments, providing investors with relatively consistent returns. The returns from liquid funds are typically higher than savings accounts or fixed deposits, making them a suitable choice for short-term investments. However, unlike savings account, the returns from liquid funds are not guaranteed and are subject to market volatility.
Why choose Bajaj Finserv Liquid Fund?
The Bajaj Finserv Liquid Fund is an open-ended liquid scheme tailored for investors valuing limited impact on the capital invested, low/low-to-moderate risk, and high liquidity. This mutual fund predominantly invests in money market and debt securities with a maturity of up to 91 days, reducing interest rate risk and maintaining a moderate credit risk level by investing in high quality securities. These characteristics make it a suitable choice for conservative investors seeking relative stability and liquidity for their short-term investments.
Who should invest in liquid mutual funds?
Short-term goal seekers
Individuals aiming for short-term financial goals like creating an emergency fund or saving for upcoming expenses within the next few months.
Corporates and institutions
Entities looking to park surplus funds temporarily while maintaining liquidity often opt for liquid funds as an alternative to traditional banking instruments.
Risk-averse investors
Those cautious about market volatility and interested in mitigating risk exposure can find liquid funds suitable due to their relative stability and lower risk profile.
Savings account holders
Individuals looking for relatively higher return potential than savings accounts while retaining accessibility to funds might consider liquid funds as an alternative for short-term parking of surplus funds. However, the returns from liquid funds aren’t guaranteed.
How to invest in liquid mutual funds?
Investing in the Bajaj Finserv Liquid Fund is convenient and straightforward:
- Investment platform – Use a reliable mutual fund platform or visit Bajaj Finserv AMC website for online investment. You can also contact an authorized distributor for the same.
- KYC verification – Complete your Know Your Customer (KYC) verification process if not done already.
- Choose the fund – Select the Bajaj Finserv Liquid Fund based on your investment objectives.
- Investment amount – Decide the amount to invest.
- Transaction – Complete the investment transaction through the chosen platform.
- Monitor investments – Track your investments periodically for performance.
Conclusion
Liquid funds offer investors a balance between relative stability, liquidity, and a reasonable return potential in the short term. Understanding NAV and returns in these funds is essential for making informed investment decisions. The Bajaj Finserv Liquid Fund, with its focus on liquidity, presents a viable option for conservative investors seeking relative stability in their short-term investments. For scheme information, click here.
FAQs:
What are the advantages of investing in Bajaj Finserv Liquid Fund?
Bajaj Finserv Liquid Fund offers relatively low/low-to-moderate risk, and high liquidity, making them suitable for conservative investors seeking relative stability.
How often is the NAV calculated in liquid funds?
NAV for liquid funds is calculated daily based on the market value of the underlying securities.
Liquid funds are suitable for which type of investors?
Liquid funds are often a preferable choice for several investors. However, they are well-suited for short-term goal seekers, conservative Investors, corporates and institutions, risk-averse investors, and savings account holders.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
This document should not be treated as endorsement of the views/opinions or as investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document is for information purpose only and should not be construed as a promise on minimum returns or safeguard of capital. This document alone is not sufficient and should not be used for the development or implementation of an investment strategy. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. This information is subject to change without any prior notice.