K Liquid is a short-term debt fund launched in October 2000. With minimum investments of Rs 1 lakh, investors can enter and exit the fund on a no load basis without any lock in. The scheme offers two investment options - growth and dividend reinvestment option. The fund has a consistent track record of dividend payout under its dividend option.
While honouring redemption with in 24 hours, the fund offers the added feature of Sunday and holiday NAVs. Thus, redemptions on Monday would be honoured on the basis of Sunday NAV and not on Friday NAV.
A short tern debt fund, the fund seeks to offer high liquid and reasonable returns. Towards this end, the fund invests in a mix of money market instruments, corporate bonds and Government Securities. With its launch coinciding with the bullish sentiments in the markets, K bond has held a preference for corporate bonds, which account for 55% of the corpus in the last trailing half-year. These instruments tend to offer better returns in a bullish market. Bonds however are also susceptible to interest rate risk - gaining value with a rate cut and vice versa. However, the fund has reined in the interest rate risk not being too aggressive on its maturity. While the fund had stretched its maturity to 167 days in Feb 2001, its has currently pruned it to 113.15 days. The other part of its rapidly growing corpus has been invested in commercial papers and treasury bills.
In its short tenure, K liquid has struck the balance between risk and returns to offer a simple return of 7.30%. With this, its performance falls just a shade or two above the category performance.