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  • Ankur Kapur

Parag Parikh Liquid Fund

Updated: Jun 22

Liquid funds invest in bonds that have a maturity of up to 3 months. These investments are suitable for investors who want to save for an emergency fund or park the surplus.

Expense ratio: 0.16%

AuM: Rs 467 crores


The investments are primarily in government securities (RBI bonds). For the most part, there is no credit risk related to investment in Parag Parikh Liquid Fund.

As a category, these funds are suitable for safety and not for wealth creation.

Taxation

Capital gain

If the redemption is placed within 3 years from the date of investment, gains will be included as part of investor’s income and tax is required to be paid as per the investor’s tax slab.

If the redemption is placed after 3 years from the date of investment, gains will be taxed at 20% after indexation.

Dividends

Dividends declared by the fund is included as part of the investor’s income and tax is paid as per the investor’s tax slab.


Mutual fund return (25th May 2020)

Due to Covid 19 issue that caused government yields to increase, had no impact on the NAV of this fund.

During the month of March 2020, there was a sudden fall in the NAV because of G-Sec yields shot up due to Coronavirus fear. However, as RBI took action of reducing the interest rate, NAV recovered.

Modified Duration 0.12 years

Average Maturity 0.12 years

Yield to Maturity 3.53 %

Modified duration of a bond fund is represents change in the value of a security in response to a change in interest rates.

Average Maturity is the weighted average of all the current maturities of the debt securities held in the fund.

Yield to maturity (YTM) is the total return anticipated on a bond if the bond is held until it matures.


Holding (%)

AAA 1.1%

AA 0.0%

Cash 22.2%

Government 76.7%

A+ 0.0%

A & Below 0.0%

Parag Parikh Liquid Fund is one of the safest liquid funds to invest. A majority of investments are only Government security (T-bills) maturing in less than 3 months.

There is no credit risk including credit default since most of the investments are Treasury Bills backed by RBI.


In the current credit scenario, Parag Parikh Liquid Fund offers a good alternative to a fixed deposit with a bank.

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