Are liquid funds still good for your very-short-term corpus?

Retail investors have conventionally used liquid funds either for very short-term investing needs or to park their emergency corpus. The premise behind investing in these funds is that they are able to generate reasonably better returns than a savings bank account without compromising on liquidity. Even though the returns aren't guaranteed as in the case of a bank account, the risk of loss in these funds is negligible. However, in the present scenario, with the interest rates hitting their multi-decadal lows, the advantage liquid funds had over a savings bank account has weaned off. The graph titled 'Comparing the return expectations' shows how the net yield-to-maturity (YTM) of liquid funds has dropped over the last one year to hover around at a touching distance of the savings account rates. Many fund managers believe that while interest rates reversal may take some time to happen, the RBI's future course of action will be to incrementally start withdrawing the surplus liquidity from the markets. Therefore, yields towards the shorter end of the yield curve, which are fairly compressed, may inch up a bit. So as and when liquid funds' portfolios become due for maturit