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Investments in liquid funds, which invest in short-term debt instruments, offer better returns for retail investors than those in savings bank accounts, says a study.
A study conducted by CRISIL FundServices has found that liquid funds not only offer higher post-tax returns but also provide a reasonable degree of safety in terms of the principal invested.
Liquid funds invest in short-term debt instruments with a maximum maturity of 91 days. They can be redeemed within 24 hours and have no exit load, CRISIL said.
“Beyond returns, liquid funds also have advantages in terms of liquidity, safety and portability,” the CRISIL Research Senior Director, Mr Mukesh Agarwal, said.
Over the last 5 years, liquid funds rated by CRISIL have given an annualised post-tax return of 5.78 per cent, compared to 3 per cent given by a savings bank account.
The study said that a majority of Indians continue to park a large amount of funds in savings bank accounts.
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