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Q.

How the liquid fund works? please explain

About: Mutual Fund: HSBC Cash Fund - Institutional Plus Plan

Asked by Amit Tale, 29 Apr '09 03:41 pm
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Answers (2)

1.

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Answered by Eswar Rao, 29 Apr '09 04:34 pm

 
  
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2.

Liquid funds are ultra short-term debt funds that invest in money market instruments such as certificate of deposits, commercial paper and treasury bills, either on an overnight basis, ten days or a month.

Liquid funds have no entry and exit loads in most cases. Compared to savings accounts, where the returns are as low as 4% per annum, the historical returns on liquid funds have been as high as 8% per annum. Moreover, liquidation is easy. Investors can liquidate at an NAV (net asset value) which they consider to be lucrative, as against a normal mutual fund where an NAV just has a notional value. These funds require a minimum investment of Rs 1,000. However, some funds have a minimum investment requirement of Rs 5000-10 ,000 or Rs 25,000.

There are two kinds of liquid funds. One is a pure liquid fund and the other is liquid plus. The main difference between pure liquid and liquid plus funds is the tenure of the securities held. The instruments held by liquid plus funds have a l ...more
Answered by Krishnakumar G. Nair, 29 Apr '09 03:53 pm

 
  
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