Can you please let me know the difference between Liquid Fund and Ultra Short Term Debt Fund?
- Dinesh Shah
Liquid Funds are similar to holding cash in hand or in a savings bank account, with returns in recent years ranging from 7-8 per cent. Liquid funds invest in very short term debt instruments having a maturity period of less than 91 Days. They are the lowest risk category of debt funds because neither do they invest in lower rated corporate bonds nor do they take long-term rate calls. Generally Liquid Funds will not have any exit load. Please follow the link to see the various funds in this category.
Ultra Short Term Funds invest in slightly longer term debt instruments with maturity of more than 91 days and less than 1.5 years. Some of these funds may invest in lower rated corporate debt. Ultra Short Term Funds may also levy an exit load for investors who redeem units within a specified period. Please follow the link to see the various funds in this category.
This article was originally published on July 13, 2016.
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