Understanding the Benefits of Liquid Funds in Your Sundaram Mutual Fund Portfolio

 Liquid funds are an important component of any investment portfolio, providing stability and liquidity. Sundaram Mutual Fund offers a range of excellent liquid funds that can benefit investors in various ways. This article explores the key advantages of including Sundaram liquid funds in your portfolio.

Safety and Low Risk Sundaram's liquid funds invest predominantly in very short-term debt and money market instruments. As these have a low duration risk, the chances of negative returns are minimal. Liquid funds usually provide slightly higher returns than savings accounts, with the added benefit of instant liquidity. This makes them a safe parking place for your emergency corpus.



Easy Liquidity You can withdraw your money from Sundaram's liquid funds instantly, without any exit load. This makes them ideal for parking funds you may need at short notice. The ease of liquidity allows you to redeem your investments and have the money credited to your bank account on the same day. This flexibility gives liquid funds an edge over fixed deposits.

Higher Post-Tax Returns Compared to traditional savings and fixed-income options, Sundaram's liquid funds can deliver better post-tax returns in the same risk category. This is because they come under the debt fund category and enjoy indexation benefits on long-term capital gains tax. Depending on your tax slab, this significantly improves your overall post-tax yield.

Regulate Cash Flows Liquid funds allow you to systematically invest a fixed sum at regular intervals and redeem it periodically. This disciplined approach helps you efficiently build your corpus over time. It also regulates your cash outflows to meet specific needs like children's education, retirement, etc. The flexibility makes them ideal for parking temporary surpluses.

Hedge Against Volatility Adding Sundaram's liquid funds provides stability to your portfolio during market downturns. By offsetting the impact of volatility in your equity investments, they allow your portfolio to stay the course and give you better risk-adjusted returns. The low volatility also makes them suitable for short-term goals.

Including Sundaram's liquid funds in your mutual fund portfolio provides multiple benefits, like stability, flexibility, liquidity and better post-tax yields. Match your investment horizon carefully and allocate a suitable portion to these funds to optimise your overall portfolio returns. Their prudent risk management also makes them ideal for parking emergency funds.

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