What makes Bajaj Finserv Liquid Fund a suitable option during uncertain times?

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Planning is essential for dealing with the ups and downs in the economy. Choosing a suitable investment option is critical, especially in uncertain times. A relatively stable investment option, which has caught the attention of many, is the liquid fund. Let’s take a look at the key features of a liquid fund and understand why the Bajaj Finserv Liquid Fund can be a sound investment option during uncertain times.

  • Table of contents
  1. Understanding liquid funds
  2. The value of liquid funds in an uncertain economy
  3. Why choose Bajaj Finserv Liquid Fund?
  4. Brief asset allocation
  5. Liquidity benefit
  6. FAQ

Understanding liquid funds

A liquid fund is a type of mutual fund that primarily invests in short-term market instruments, such as treasury bills, commercial papers, and other debt securities. Some of the key features of a liquid fund include:

  • Short maturity period – usually up to 91 days
  • Relatively lower risk as compared to many other mutual funds
  • Quick and easy redemption – investors can get their money out in a day with the insta-redemption facility.
  • Potentially stable returns – though that may vary based on market conditions

The value of liquid funds in an uncertain economy

With economic unpredictability becoming the norm, traditional long-term investment avenues have shown increased volatility. Stock markets are affected by global events, real estate no longer promises the steady appreciation it once did, and even fixed deposits face their own set of challenges with fluctuating interest rates. Liquid funds are a relatively stable investment options as they do not invest in stocks, which are prone to price fluctuations.

Relative stability: Liquid funds, particularly the Bajaj Finserv Liquid Fund, can be a suitable option for investors who wish to remain cautious with their investments. The scheme is designed to mitigate impact on the principal amount while still generating potentially reasonable returns.

High liquidity: Additionally, the ease of liquidity means that investors can access their funds quickly.

The blend of relative stability, returns, and liquidity makes liquid funds a suitable option for both seasoned investors looking to park surplus funds and new entrants seeking a taste of investing without excessive risk.

Most importantly, when choosing an investment avenue, the reputation and strategy of the fund house play an important role. In this aspect, Bajaj Finserv Asset Management Ltd. strives to ensure that your hard-earned money is not only mitigated from market risks and volatility but also potentially grows.

Why choose 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.

Brief asset allocation

The asset allocation of Bajaj Finserv Liquid Fund is straightforward: 100% in debt (including floating rate debt instruments) and money market instruments. The investments will be instruments with maturity upto 91 days. This allocation strategy positions the fund's risk profile as low to moderate. By not diversifying into higher risk assets, the fund seeks to ensure limited impact on capital invested while still aiming for a reasonable return potential.

Bajaj Finserv Liquid Fund is tailored for investors looking for short-term investment vehicles. The primary instruments in the fund's allocation are CDs, CPs, and T-bills. However, the fund may tactically allocate to other instruments based on prevailing market scenarios. One of the key features of this fund is its commitment to high-rated securities, minimising credit risk.

Liquidity benefit

Liquidity risk management is one of the biggest advantages Bajaj Finserv Liquid Fund offers. The fund does this in two ways. First, by maintaining the necessary regulatory level of cash and cash equivalents. And second, by actively managing liquidity in alignment with the broader macroeconomic and debt market scenarios. This ensures that investors can easily redeem their investments. The emphasis on high credit quality, short maturity, and strategic maturity bucketing of securities ensures efficient liquidity management.

Bajaj Finserv Liquid Fund can be a suitable option for investors seeking:

  • Limited impact on Capital invested
  • Short-term investment avenues
  • Low to moderate risk exposure
  • Quick liquidity

To sum up, in a constantly fluctuating market scenario, having a relatively steady, low/low to moderate risk investment option like the Bajaj Finserv Liquid Fund can serve as an anchor to the investor, offering the benefits of both less volatility to capital invested and liquidity.

FAQs:

What is a liquid fund?
A liquid fund is a mutual fund that invests in short-term market instruments like treasury bills, commercial papers, and other debt securities with maturity upto 91 days, offering low/low to moderate risk and quick redemption.

Is Bajaj Finserv Liquid Fund stable?
While the Bajaj Finserv Liquid Fund focuses on less volatility to capital invested and maintains a low to moderate risk profile, all investments carry some risk. The fund’s strategy is to minimise risks by investing in high-rated securities and managing liquidity effectively.

How can I invest in the Bajaj Finserv Liquid Fund?
You can invest in the Bajaj Finserv Liquid Fund through authorized distributors, or the official website of Bajaj Finserv Mutual Fund or through a financial advisor.

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.