What is a Liquid Mutual Fund?

Liquid mutual funds are schemes that invest in securities like bank deposits, commercial papers, treasury bills, etc. with a residual maturity of up to 91 days. They are considered low risk as the maturity periods of the underlying securities are lower. They are considered as alternatives to savings accounts due to their higher return potential. Redemption of a Liquid Mutual Fund usually takes T+1 day (one day after your request is placed). Some fund houses allow an instant withdrawal of ₹50,000 or 90% of your investment, whichever is lower.