Top 5 Best Debt-Liquid Mutual Funds in 2017 | Best Short Term Investment Options In India

List of Best Debt-Liquid Mutual Funds ReviewLooking for the best short term investment option to get some decent return? Then mostly savings account or fixed deposit schemes come into our mind. But do you know that there is a good fixed deposit alternative which is called Liquid mutual funds. Where you can invest your money and make some quick money. Of all the Liquid Mutual Fund available in India, there are five that rank the chart. Before we know more about it in detail and the stats, it is important to know the difference between Mutual Fund and Liquid Mutual Fund.

What is the meaning of liquid funds?

Liquid funds are simply debt mutual funds that invest your money in very short-term market instruments such as Bank Certificate of Deposits, Bank Fixed Deposits, Treasury Bills, Bill Rediscounting, Commercial Paper, Collateralised Borrowing & Lending Obligation and other debt securities and invest your money that hold least amount of risk. These funds can invest in instruments up to a maturity of 91 days. The maturity is mostly much lower than that. In short, if you want to invest your money for shorter period of time, but not expecting much return compared to bank savings account or 4% then Liquid mutual funds are good options.

Difference between Mutual Fund and Debt-Liquid Mutual Fund

I think from the definition of Liquid mutual funds, it is clear that the money is investing in all paper related or security documents or bonds to get guaranteed return. Where other mutual funds are investing directly on companies stocks or equity where the risk is very high and so as the return on investment. If you are not ready to take much risk on your investment, but want to earn little extra money compared to fixed deposit schemes or bank savings account interest then you can opt for such liquid funds to better return in short period of time.

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How To Choose The Top Debt-Liquid Mutual Funds To Invest in 2017

Well, the basic criteria here is to go with the reputed fund houses with good market capitalization and off course with highest Crisil rating. So here are few of the ways one can find out the best liquid funds in India.

  • As the investment horizon for such funds are considered as short term, so concentrate on return on investment from 1 week to 1 year. You can off course keep your money for long term, but mostly people are preferring such funds to make short term gain, rather keeping the money idle or putting in savings bank account for a interest rate of just 4%.
  • Check out the track record of the funds and how much assets under management f AUM in crores. This will clearly tell you how good the fund has performed, how well the management is. Its better to stay with the best generally. 🙂

Top 5 Liquid Mutual Fund With Highest Crisil Rating

Mutual Fund Scheme Crisil Rank AUM 6 month 1 Year 3 Year
Indiabulls Liquid Fund 1 770.45 3.5 7.8 8.4
ICICI Pru Liquid Plan 1 11,652.22 3.4 7.6 8.3
JM High Liquidity 1 1,619.78 3.5 7.6 8.3
ICICI Pru Money Market Fund 2 2,219.39 3.4 7.6 8.3
LIC Liquid Fund 2 1,914.27 3.4 7.5 8.2

Top 5 Liquid Funds 2017 With Highest 1 Year Return on Investment

Mutual Fund Scheme 1 Year
Sundaram Debt STP AP -Direct (G) 10.4
Sundaram Debt STP AP (G) 9.3
JM High Liquidity – Inst (G) 9
L&T Liquid – Inst Plus-G  Buy Online 8.7
DHFL Pramerica Treasury-Cash Plan -Direc 8.4

Top 5 Debt-Liquid Mutual Funds With 3 Year Highest Return

Mutual Fund Scheme 3 year
Sundaram Debt STP AP -Direct (G) 9.8
JM High Liquidity – Inst (G) 9.3
DHFL Pramerica Liquid Fund -Direct (G) 8.9
Principal Money Manager-Direct (G) 8.8
DHFL Pramerica Liquid Fund (G) 8.8

Disclaimer: This data is collected from Moneycontrol.com website based on the latest mutual fund data.

Liquid Mutual Funds Taxation Rules

The income tax rules are similar for general mutual funds only. That means if you are investing for less than 3 years then you have to pay Short Term Capital Gain (STCG) tax. But if you are holding the funds for more than 3 years, then Long Term Capital Gain (LTCG) tax will be applied. The STCG will be applied as per your income tax slab, when the LTCG tax will be applied 20% with indexation benefit.

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List of 5 best liquid mutual funds 2016 in India with good performance records

This is the list I have prepared as per the data collected last year. You can also study these funds and understand how  they gave good return till date.

  1. SBI Premier Liquid Fund: This is one of the five best liquid mutual funds that is the talk of the country. When it began its venture on 23rd of March, 2007, it was known as SBI Magnum Institutional Income Savings plan. The same scheme has gotten changed to SBI Premier Liquid Fund which is an open scheme. One willing to invest can do that with a minimum amount of Rs 50,000. The amount of dividend as on 6th of April, 2008 is Rs 2.85. Earlier the face value per unit was Rs 10 which has now got revised to Rs 1000 per unit. It is a great jump. As the name SBI is associated, it is one of the most trusted liquid funds.
  2. ICICI Pru Money Market Fund: This is the second name that is creating news for its immense flexibility of accessing cash whenever required. Most of the investors who are willing to make money through short-term investments, this is considered the best. Cash which is not in use for longer period of time can be invested here for better returns. With a very low risk of loss, the minimum amount that can be invested is set at Rs 5000 and an additional investment of Rs 1000.
  3. DSP-BR Liquid Fund: If someone is looking for higher return compared to the investment, then this one is highly recommended for various reasons. First of all, it is a low-risk open-ended scheme and secondly, it is highly liquid. Thirdly, one can invest a minimum amount of Rs 5000. The scheme has been topping the chart of the most trustworthy liquid fund in India since 2014. The rank was decided in the category of Liquid by CRISIL. People who have already invested here should think of investing more.
  4. JP Morgan Liquid SIP: It is a name recommended in the category of debt securities and money market. With low risk and high probability of better returns, many like to invest here. It has years of experience in the field. Launched in September of 2008, the scheme is a name trusted for years. Comparatively the minimum amount of investment is higher, Rs 10,000. In the year 2014, the scheme was ranked fourth by CRISIL in the Liquid Category but with tremendous growth and improvement, it has achieved the first rank.
  5. HDFC Liquid Fund: Consistency is not a one-time achievement, it’s a habit and this has been maintained by HDFC Liquid Fund since inception in the year 2000. People looking to invest not for too long and reaping a good income in return can seek for this scheme that has great dividend plans with the facility of reinvestment. The time taken for the redemption process to settle is fast and reliable. The consistency in terms of maintaining the liquidity level is commendable with a number of investors increasing every year.
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Should I Invest In These Best Debt-Liquid Mutual Funds 2017

By now, you must have made up your mind in investing in one of these liquid mutual funds that are offering great flexibility and reliability. If you are bored of the meager interests from your savings account, it is high time for you to take a call and invest after understanding the pros and cons. Short period earning or profitability is what everyone desires for and nothing can beat these liquid funds that are making people dream with open eyes.

So, if you are planning to create a short term wealth or emergency fund or just looking for a better investment option compared to your bank savings account then these liquid funds may fulfill your requirement. But one should not expect a high different in interest rate, as the difference might be hardly around 1% – 2% max compared to fixed deposit account in 1 year duration and even less compared to bank savings account when you invest for shorter duration like 1 month, 3 months etc. So, what is your take on best debt-liquid mutual funds in India? Write a comment below and share your experience or doubt if any.

Top 5 Best Debt-Liquid Mutual Funds in 2017 | Best Short Term Investment Options In India
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