What are money market or liquid funds?
Money market or liquid mutual funds are a type of short-term debt fund that focuses on preserving capital and providing high liquidity. These funds invest in low-risk, short-duration instruments such as treasury bills, commercial papers, certificates of deposit, and overnight securities.
Their objective is to offer modest returns while ensuring safety and quick access to funds, making them ideal for temporary parking of surplus money.
Key features of money market/liquid funds
- Invest in instruments with maturities of up to 91 days
- Aim for capital preservation and quick redemption
- Minimal interest rate and credit risk
- Suitable for short-term goals or idle cash management
What if...
| Scenario | Explanation |
|---|
| You want to invest idle cash | Liquid funds let you earn modest returns with easy redemption. |
| You need funds in 1–2 months | These funds are built for short holding periods with low volatility. |
| You are risk-averse | These schemes offer safety with lower but more stable returns. |
| You plan for an emergency fund | Money market funds work well for maintaining liquidity with earning potential. |
Money market and liquid funds are great for managing temporary cash needs without compromising on safety. They offer better returns than a regular savings account, with comparable liquidity.
Last updated: 16 Jun 2025
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