Fall in liquid funds

The equity markets have always donned several hats - the wealth creator, the panic filter and the fall-bearer. Following the turmoil fuelled by the Coronavirus outbreak and oil crash, the equity markets have been revealing its true nature. Even though many mutual fund investors are well aware of the equity gymnastics, some are on tenterhooks, seeing this pendulum-type behaviour. However, when it comes to debt funds, investors hardly witness liquid funds delivering negative returns. What happened? With the markets getting into a risk aversion mode, institutional investors are moving money out of the debt markets. Consequently, bond yields have increased, affecting even the very short-term segment of the debt markets. As a result, liquid funds have also witnessed a pinch of red, with their one-day returns turning negative later last week. Of the category of about 39-odd funds, over three-fourth of funds recorded negative one-day returns on Wednesday and Thursday last week. Even for some funds, this fall turned their entire one-week returns negative (look at the following table) Funds that delivered negative one-week returns (%) Scheme Returns HSBC Cash -0.12 Union Liquid -0.07 Kotak Liquid -0.07 IDFC Cash -0.07 Mahindra Liquid -0.06 Tata Liquid -0.05 L&T Liquid -0.05 UTI Liquid Cash -0.05 Nippon India Liquid -0.04 Invesco India Liquid -0.04 BNP Paribas Liquid -0.04 PGIM India Insta Cash -0.03 HDFC Liquid -0.03 Edelweiss Liquid -0.03 BOI AXA Liquid -0.03 ICICI Prudential L