Understanding the features of Bajaj Finserv Liquid Fund

Understanding the features
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The Bajaj Finserv Liquid Fund is an open-ended liquid scheme offered by Bajaj Finserv Asset Management Ltd. As the name suggests, this mutual fund scheme invests mainly in money market instruments, certificates of deposits, commercial papers, and other short-term debt securities. The fund aims to generate potentially stable returns with a relatively low/low to moderate level of risk through its investments in liquid and short-term instruments.
Let's explore the various features and benefits of investing in this Bajaj Finserv Mutual Fund.

  • Table of contents
  1. Understanding liquid funds
  2. Key features of Bajaj Finserv Liquid Fund
  3. Bajaj Finserv Liquid Fund Benefits
  4. Use cases for Bajaj Finserv Liquid Fund

Understanding Liquid Funds

Liquid funds are a type of debt mutual fund that invests in money market instruments, certificates of deposit, commercial papers, treasury bills, and other short-term securities. The maturity period of instruments in liquid funds is up to 91 days. As a result, these funds offer high liquidity with the ability to convert investments into cash instantly or within a day. Liquid funds can be a suitable option for parking surplus funds for short durations and can deliver potentially reasonable returns than savings accounts. However, the returns aren’t guaranteed in the case of liquid funds.

Key Features of Bajaj Finserv Liquid Fund

Some of the salient features of the Bajaj Finserv Liquid Fund are below:

  • Investment Objective: The scheme aims to deliver reasonable market-related returns with low/low to moderate risk and high liquidity through investments in money market and short-term debt instruments maturing within 91 days.
  • Liquidity: The fund offers same day redemption and instant liquidity in normal market conditions as per SEBI regulations. This is limited to Rs. 50,000 or 90% of the invested amount, whichever is lower.
  • Risk Profile: The fund has a low/low to moderate risk profile due to the short-term nature of its investments. Credit risk is also low due to diversification across issuers and instruments.
  • Minimum Investment: The minimum lumpsum and SIP investment amount are Rs. 1,000.

Bajaj Finserv Liquid Fund Benefits

  • Reasonable Returns Potential Over Savings Account: The fund can generate relatively stable returns based on prevailing interest rates. These returns tend to be usually higher than those offered by savings accounts in banks. However, unlike a savings account, returns from liquid funds aren’t guaranteed.
  • High Liquidity: The fund offers instant redemption and access to money within a day. This makes it suitable for parking short-term surplus funds.
  • Low/Low to Moderate Risk Profile: The fund does not take any duration or credit risk. Money is parked only in the highest quality instruments maturing within 91 days. This minimizes the impact of market volatility on capital.
  • Ideal for Short-Term Goals: The liquidity and low/low to moderate risk profile make it well-suited for financial goals 1-3 months away or to build an emergency corpus.
  • Easy Online Access: Investments can be monitored easily through the online portal or mobile app offered by Bajaj Finserv Mutual Fund. You can also seek the help of an authorized distributor for the same.
  • Professional Fund Management: Investor money is managed by experienced fund managers who can optimize the return potential at low/low to moderate risk through prudent investment decisions.

Use Cases for Bajaj Finserv Liquid Fund

The Bajaj Finserv Liquid Fund is well-suited for various short-term investment needs.

  • Parking Short-Term Surplus: The fund is an efficient alternative to savings accounts to park surplus funds for 1-3 months. It offers return potential without compromising relative stability or liquidity. However, unlike savings accounts where returns tend to be assured, returns from Bajaj Finserv Liquid Fund are subject to market risks.
  • Building Emergency Corpus: The liquidity and low risk/low to moderate risk make it suitable to accumulate funds to cover 3-6 months of expenses for emergencies.
  • Planned Expenses: The fund can be used to park money earmarked for planned medical expenses, vacation spends, or insurance premiums 1-6 months away.
  • Retail Investors: The fund can allow retail investors to earn better returns on idle funds left in bank accounts for short durations.
  • Lumpsum Investments: Investors looking to deploy a lumpsum can park funds in a liquid fund while evaluating long-term options.
  • SIP Investments: The fund can be used to save small amounts regularly to meet short-term goals via SIPs.

Conclusion

The Bajaj Finserv Liquid Fund offers retail and institutional investors an efficient avenue to invest idle funds lying in bank accounts for short durations. The fund offers optimal returns while maintaining liquidity and low/low to moderate risk. For parking surplus funds up to 3-6 months, the fund presents an attractive investment proposition.

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 purposes 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.