All you need to know about Bajaj Finserv Liquid Fund

Liquid Fund
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Liquid funds have emerged as a viable choice for individuals eyeing short-term investment avenues with a relatively lower/low to moderate risk profile. A notable offering in this category of mutual funds is the Bajaj Finserv Liquid Fund, which is managed by Bajaj Finserv Asset Management Ltd.

Let’s evaluate the key features of the Bajaj Finserv Liquid Fund and assess if they align with your investment objectives.

  • Table of contents
  1. What is Bajaj Finserv Liquid Fund?
  2. Key features of Bajaj Finserv Liquid Fund
  3. Understanding the significance of AUM
  4. Tax implications
  5. FAQ

What is Bajaj Finserv Liquid Fund?

Liquid funds are a category of mutual funds that invest in debt and money market securities with a short maturity period, usually up to 91 days. These funds are known for their relatively low/low to moderate risk and high liquidity, making them a preferred choice for investors looking to park their funds for short durations.

Among the plethora of liquid funds, the Bajaj Finserv Liquid Fund, managed by Bajaj Finserv Asset Management Ltd, presents a noteworthy option. This plan is an open-ended liquid scheme that seeks to balance moderate credit risk with relatively low interest rate risk, with an aim of generating a relatively steady income. In effect, the Bajaj Finserv Liquid Fund strives to reduce impact of volatility and provide liquidity, through investments in money market and debt securities with a maturity of up to 91 days.

Key features of Bajaj Finserv Liquid Fund

  • Investment objective: To provide a level of income consistent with the objectives of preservation of capital, lower risk and high liquidity through investments made primarily in money market and debt securities with maturity of up to 91 days only. There is no assurance that the investment objective of the scheme will be achieved.
  • Risk profile: Bajaj Finserv Liquid Fund offers relatively low interest rate risk and moderate credit risk, and is designated as B-I in the Potential Risk Class (PRC) matrix
  • Plans and options: Bajaj Finserv Liquid Fund offers both direct and regular plans with Growth and Income Distribution cum Capital Withdrawal (IDCW) options to cater to diverse investor preferences
  • Minimum investment amount: With a threshold of Rs. 1,000 for both SIP and lump sum investments, Bajaj Finserv Liquid Fund stands as an accessible investment avenue
  • Fund managers: The experienced duo of Mr. Siddharth Chaudhary and Mr. Nimesh Chandan seek to steer the fund towards achieving its objectives

Understanding the significance of AUM

The Asset Under Management (AUM) reflects the total market value of the assets controlled by the fund, showcasing the fund's size and success in attracting investments. This metrics can help investors assess the investment viability of the scheme.

The Bajaj Finserv Liquid Fund is not a guaranteed return scheme, implying the absence of assured returns. The investment risks encompass trading volumes, settlement risk, liquidity risk, and default risk amongst other risks that are disclosed in Scheme Information Document. Furthermore, the price of your investment may fluctuate based on market conditions.

Tax implications

Since the removal of indexation benefits on debt funds post April 1, 2023, the tax implications on capital gains from Bajaj Finserv Liquid Fund are subject to individual tax brackets. Thus, investors are advised to consult their tax advisors for personalised advice. The Scheme Information Document (SID) of the fund is in line with SEBI regulations, ensuring all legal requisites have been adhered to.

Conclusion

Investing in mutual funds requires a nuanced understanding of one’s financial goals and risk tolerance. The Bajaj Finserv Liquid Fund offers a relatively better return potential for those eyeing short-term investments with a low to moderate risk profile. However, it’s advisable to consult a financial advisor or distributor for tailored investment advice, ensuring the chosen scheme aligns well with individual financial aspirations.

FAQs:

How is the NAV of Bajaj Finserv Liquid Fund calculated?
The NAV is calculated daily and disclosed before 11:00 p.m. on all business days.

How does Bajaj Finserv Liquid Fund mitigate risks?
By investing in money market and debt securities with maturities up to 91 days, Bajaj Finserv Liquid Fund seeks to mitigate associated risks to a considerable extent.

Who should invest in Bajaj Finserv Liquid Fund?
Individuals seeking short-term investment with a relatively lower/low to moderate risk profile might find Bajaj Finserv Liquid Fund a suitable option.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
This document should not be treated as an 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.