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Posted On Thursday, Dec 30, 2021
|Table of Contents|
What are Liquid Mutual Funds?
Liquid Mutual Funds Taxation
Liquid Mutual Funds Returns
Liquid Mutual Funds in India
Have you heard the famous quote by John C Bogle?
It goes like – “The mutual fund industry has been built, in a sense, on witchcraft”.
Don’t get us wrong… We are not asking you to pull out an Ouija board and start calling for the unknown.
The idea behind the quote is just to say that it is an unknown space for the one who isn’t well versed with it.
Most investors go on hearsay and end up losing their hard-earned money in the run.
Because many investors are looking for something from their investments – Liquidity!
That is where Liquid Mutual Funds come into the picture.
Let us know more about Liquid Mutual Funds meaning.
Liquid funds are just a type/class of debt funds that majorly invest in money market instruments that are basically short-term...
For example, treasury bills, commercial paper etc. are some of the examples of the underlying securities in a liquid mutual fund.
To understand this in detail, we must see how liquid mutual funds work.
To begin with here is the first and most important objective of Liquid Mutual Funds - A high degree of liquidity for investors.
The fund manager of Liquid Mutual Funds are mandated to invest in money market/debt instruments that mature in just 91 days. However, the allocated proportions are completely in line and sync with the fund’s investment objective.
If you are looking for an option to park your surplus money, Liquid Mutual Fund is a good option. After all, these funds are generally low-risk options that has potential to provide market linked returns.
Liquid mutual funds try to outdo the liquidity aspect that a savings bank account can give you.
We hope that makes the liquid mutual fund meaning clear to you, than it was earlier.
So, moving ahead of the liquid mutual fund meaning, you must now know about liquid mutual fund returns.
Liquid Mutual Fund Returns:
Liquid Mutual Fund Returns are not guaranteed, but more than often, they have been known to give better post tax returns.
Hence you must know more about Liquid Mutual Fund Taxation if you plan to invest in Liquid Mutual Funds.
Liquid Mutual Funds Taxation:
Like any other type of mutual funds, Liquid Mutual funds also give returns to investors in the form of IDCW and capital gains. If an investor earns a capital gain units in- such gains are taxable.
• Short term capital gains:
This comes in play if the holding period of the investment you make in Liquid mutual funds is less than 3 years. In such a case, it is considered to have earned what is called short‐term capital gains. These gains are added to your overall income and then taxed at the applicable income tax slab rate.
• Long term Capital Gains Tax:
This is when the holding period of your investment in liquid mutual funds is more than 3 years. In that case, the capital gain is considered a long-term capital gain, and the investor gets the benefit of "indexation." In simple words, the purchase price is increased to adjust for inflation, using a government provided Cost Inflation Index (CII) before calculating the capital gain.
These long-term capital gains are taxed at a rate of 20%, after indexation.
So now you are better informed when it comes to Liquid Mutual Funds Taxation & Returns.
And if you want to start investing in liquid mutual funds, here is what the markets have to offer when it comes to Liquid Mutual Funds in India.
Liquid Mutual Funds in India:
Let us tell you more about one of the Liquid mutual funds in India, the Quantum Liquid Fund.
Quantum Liquid Fund invests majorly in money market instruments, Government Securities and Treasury Bills, issued by Public Sector Undertakings.
It is an open-ended liquid scheme, suitable for investors who are looking for income over the short term or ones looking to invest in debt/money market instruments.
Here is a glimpse of the performance for the fund:
|Performance of the Scheme||Direct Plan|
|Quantum Liquid Fund - Direct Plan - Growth Option|
|Current Value ₹10,000 Invested at the beginning of a given period|
|Period||Scheme Returns (%)||Tier 1 - Benchmark# Returns (%)||Additional Benchmark Returns (%)##||Scheme (₹)||Tier 1 - Benchmark# Returns (₹)||Additional Benchmark Returns (₹)##|
|Since Inception (07th Apr 2006)||6.89%||7.00%||6.21%||28,382||28,865||25,700|
|Nov 30, 2011 to Nov 30, 2021 (10 years)**||6.74%||7.20%||6.80%||19,200||20,061||19,313|
|Nov 30, 2014 to Nov 30, 2021 (7 years)**||5.81%||6.48%||6.51%||14,851||15,528||15,559|
|Nov 30, 2016 to Nov 30, 2021 (5 years)**||5.15%||5.89%||5.91%||12,854||13,314||13,328|
|Nov 30, 2018 to Nov 30, 2021 (3 years)**||4.41%||5.13%||5.82%||11,385||11,621||11,850|
|Nov 30, 2020 to Nov 30, 2021 (1 year)**||3.15%||3.57%||3.49%||10,315||10,357||10,349|
|Oct 31, 2021 to Nov 30, 2021 (1 month)*||3.40%||3.97%||3.76%||10,028||10,033||10,031|
|Nov 15, 2021 to Nov 30, 2021 (15 days)*||3.23%||3.69%||3.13%||10,013||10,015||10,013|
|Nov 23, 2021 to Nov 30, 2021 (7 days)*||3.49%||3.85%||2.97%||10,007||10,007||10,006|
#CRISIL Liquid Fund Index, ##Crisil 1 year T-bill Index. Data as of Nov 30, 2021
Past performance may or may not be sustained in the future.
Different Plans shall have a different expense structure.
**Returns for 1 year and above period are calculated on the basis of Compounded Annualized Growth Rate (CAGR).
Returns are net of total expenses.
The Scheme is managed by Mr. Pankaj Pathak from Mar 17, 2017. For the performance of other schemes Managed by Mr. Pankaj Pathak, please click here.
So, you now know well enough about Liquid Mutual Funds to make informed decisions.
This article covers about Liquid Mutual Funds Meaning, Liquid Mutual Funds in India, Liquid Mutual Funds Returns, Liquid Mutual Funds taxation etc
So, if you want to start investing in a leading liquid mutual fund, you can start right here.
|Name of the Scheme||This product is suitable for investors who are seeking*||Risk-o-meter of Scheme||Risk-o-meter of Benchmark|
| Quantum Liquid Fund|
(An Open-ended Liquid Scheme. A relatively low interest rate risk and relatively low credit risk.)
Primary Benchmark: Crisil Liquid Fund Index
| • Income over the short term|
• Investments in debt / money market instruments.
Investors understand that their principal will be at Low Risk
|Potential Risk Class Matrix - Quantum Liquid Fund|
|Credit Risk →||Relatively Low||Moderate (Class B)||Relatively High (Class C)|
|Interest Rate Risk↓|
|Relatively Low (Class I)||A-I|
|Moderate (Class II)|
|Relatively High (Class III)|
The views expressed here in this article / video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments.
Please visit – www.quantumamc.com/disclaimer to read scheme specific risk factors. Investors in the Scheme(s) are not being offered a guaranteed or assured rate of return and there can be no assurance that the schemes objective will be achieved and the NAV of the scheme(s) may go up and down depending upon the factors and forces affecting securities market. Investment in mutual fund units involves investment risk such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the sponsor / AMC / Mutual Fund does not indicate the future performance of the Scheme(s). Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-) Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited. The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.
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