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Safeness of Liquid Plus Funds

An investor wants to know if Liquid Plus funds are as safe as a bank savings account

How safe are the Liquid Plus funds? Are they as safe as a bank savings account?
-K. K. Subramanian

Liquid Plus funds are not as safe as bank savings accounts. In case of liquid plus funds, neither is the principal protected nor is there a fixed percentage of return.

Liquid Plus funds are short-term debt funds that invest their corpus in T-Bills, Money Market Instruments, Certificate of Deposits, Commercial Papers, Corporate bonds and Debentures. These instruments are traded in the market and hence, their prices fluctuate. So they are somewhat riskier, but at the same time they offer higher returns than a bank savings account.

This article was originally published on March 26, 2009.

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