 "Tipping point: Have you taken excessive risks in liquid funds?")
Over the past year, liquid funds have outperformed all other categories of debt funds with a category average return of 6.65 per cent. Usually, liquid funds, which are allowed to invest in papers of up to 91 days maturity, give lower returns than funds having a higher average duration. But over the past year, interest rates have been rising, so such funds have taken a hit.
Avoid going for the category toppers in liquid funds. It is possible to give high returns in this category only by investing in lower-rated papers. As the recent IL&FS fiasco showed, such risks can come back to haunt the fund. Stick to a fund that invests predominantly in the highest-rated securities.
One subscription. Two world-class reads.
Already subscribed? Log in
Subscribe to read the full story →*Subscribe to Business Standard digital and get complimentary access to The New York Times
Smart Quarterly
₹900
3 Months
₹300/Month
SAVE 25%
Smart Essential
₹2,700
1 Year
₹225/Month
SAVE 46%
*Complimentary New York Times access for the 2nd year will be given after 12 months
Super Saver
₹3,900
2 Years
₹162/Month
Subscribe
Renews automatically, cancel anytime
Here’s what’s included in our digital subscription plans
Exclusive premium stories online
Over 30 premium stories daily, handpicked by our editors
Complimentary Access to The New York Times
News, Games, Cooking, Audio, Wirecutter & The Athletic
Business Standard Epaper
Digital replica of our daily newspaper — with options to read, save, and share
Curated Newsletters
Insights on markets, finance, politics, tech, and more delivered to your inbox
Market Analysis & Investment Insights
In-depth market analysis & insights with access to The Smart Investor
Archives
Repository of articles and publications dating back to 1997
Ad-free Reading
Uninterrupted reading experience with no advertisements
Seamless Access Across All Devices
Access Business Standard across devices — mobile, tablet, or PC, via web or app
SAVE 25%