With liquid funds, investors can get their money out in 24 hours and invest whenever they find an investment opportunity. To that extent given the covid crisis and the subsequent market crash, liquid funds did a good job in 2020 - Experts
ELSS funds (equity-linked saving scheme) offer tax benefits while providing an opportunity to earn market-linked returns, because of which it is primarily preferred by salaried professionals. However, liquid funds are often invested in for safety as they don’t fluctuate a lot.
Harsh Jain, Co-founder and COO, Groww says, “With liquid funds, investors can get their money out in 24 hours and invest whenever they find an investment opportunity. To that extent given the coronavirus crisis and the subsequent market crash, liquid funds did a good job in 2020.”
At the same time, the performance of Ultra short term funds was subdued in 2020 as compared to 2019, as was the case with liquid funds.
Stock prices dropped drastically within no time, due to the pandemic and subsequent lockdowns in 2020. While almost all stocks suffered, some were hit more than the other. According to a survey by Groww, some liquid funds, ultra-short-term funds and ELSS funds were seen to be popular among investors.
Here is a list of top ELSS funds, liquid funds and ultra-short-term funds chosen by investors on Groww;
ELSS funds averaged a return of 13.33 per cent in 2020 as compared to 8.27 per cent in 2019. In terms of assets under management, they saw modest growth of 8.82 per cent.
Top ELSS funds;
- Mirae Asset Tax Saver Fund Direct-Growth
- Axis Long Term Equity Direct Plan-Growth
- Aditya Birla Sun Life Tax Relief 96 Direct-Growth
- Tata India Tax Savings Fund Direct-Growth
- Motilal Oswal Long Term Equity Fund Direct-Growth
Industry experts say the liquid fund outflows have not been uniform. During some months they were over Rs 65,000 crores, and at times they were also negative. The net AUM of the category fell to Rs 3.75 lakh crores in November 2020 from Rs 4.85 crores in January 2020.
According to the report by Groww, the performance of liquid funds was slightly poor in 2020 as compared to 2019. The median return of 57 liquid funds with assets under management of greater 500 crores in 2020 was 4.3 per cent as compared to 6.71 per cent for the same in 2019. The best performing liquid fund gave an annual return of 4.62 per cent in 2020 which was lower than the inflation rate.
Top Liquid funds;
- ICICI Prudential Liquid Fund Direct Plan-Growth
- Nippon India Liquid Fund Direct-Growth
- Aditya Birla Sun Life Liquid Fund Direct-Growth
- Axis Liquid Direct Fund Growth
- ICICI Prudential Liquid Fund Growth
Ultra-short Term Funds
The inflows in January 2020 stood at Rs 8,152 crores whereas, for November 2020, the inflows were Rs 17,836.95 crores. The data shows that between January and November, the flows have seen ups and downs. The net AUMs for ultra short term funds rose as compared to January 2020 by around 2,000 crores. Net AUM stood at Rs 1,04,930 crores in November 2020.
The median return of 26 ultrashort duration funds with AUM greater than 500 crores was 5.81 per cent in 2020 and 8.23 per cent in 2019.
Top UST funds;
- ICICI Prudential Ultra Short Term Fund Direct-Growth
- Franklin India Ultra Short Bond Fund Super Institutional Direct-Growth
- Aditya Birla Sun Life Savings Direct-Growth
- SBI Magnum Ultra Short Duration Fund Direct-Growth
- PGIM India Ultra Short Term Direct-Growth