IL&FS Liquid Account is one of the conservative members of the staid ultra short-term category. In the past one-year, the fund's average portfolio maturity has been around 70 days – much less than the average peer's maturity of 80 days. And historically, the fund's maturity has been even lower at 10-50 days. Moreover, the fund doesn't take much credit risk, sticking with securities rated A or better.
Although this cautious strategy held the fund back a bit in Q3 and Q4 of 2002, it has done well in the not so good Q1 of 2003 and 2004. One plus with IL&FS Liquid Account is its low expense ratio of 0.49 per cent, which is one-third a percentage point less than the category average. This ensures that the fund hasn't had to take any extra risk to edge out the competition. The fund's return across time period is either in line with the category average or slightly better.
Overall, IL&FS Liquid Account has been a stable performer in the category. Within the low risk universe of cash funds, this fund is one of the least risky propositions. Thus, it's a perfect cash fund for the cautious investors for parking short-term surpluses.