COMPARISON BETWEEN LIQUID MUTUAL FUND AND … · 2021. 8. 3. · Dr. Neha Patvardhan, Professor, Department of International Business (Finance) Symbiosis Institute of International

European Journal of Molecular & Clinical Medicine ISSN 2515-8260 Volume 07, Issue 09, 2020

2848

COMPARISON BETWEEN LIQUID MUTUAL FUND AND

AGGRESSIVE MUTUAL FUND

Artayan Roy, Department of International Business (Finance), Symbiosis Institute of

International Business, Pune. Symbiosis International (Deemed University) Pune,

Maharashtra, India - 411057

Dr. Neha Patvardhan, Professor, Department of International Business (Finance)

Symbiosis Institute of International Business, Pune

Symbiosis International (Deemed University)

Pune, Maharashtra, India - 411057

INTRODUCTION

Mutual fund is the ideal place for investor to park money. Each mutual fund have different

schemes to invest and manage .An investor can invest in different schemes according to his

or her wish, and can become the unit holder of the schemes invested money in a particular

scheme of mutual fund. It is then the mutual fund invests accordingly in stocks and other

instruments.

Mutual funds invests is a tradable instrument and follows “Marko-market” valuation for their

assets. The investment risk is carried by investors, in this case it is the mutual fund,

participate in the upside potential of the corporate equities and at the same time are also

exposed to losses when markets fall.

Liquid Fund

Liquid fund has higher degree of liquidity and safety for the investment made by the investor.

It has a average maturity period of 3 months. It is thinly affected by the interest rate

fluctuation of the economy. When compared to traditional bank savings liquid mutual funds

offers higher return. So it is a efficient way to park surplus amount and it has no exit load.

Types of Money Market Instruments:

a. Certificate of Deposit (CD)

b. Commercial Paper (CPs)

c. Treasury Bills (T-bills)

BENEFITS:

1. No entry and exit loads.

2. It is the best investment options for short term, when there is a high inflation

environment.

3. Investors can withdraw their money in the form of fund at any time, and withdrawals

can be process within 24 hours on a business day.

4. These are easy to redeem.


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5. Better returns are available than fixed investments.

6. These are Suitable for putting money aside for emergencies.

7. There is near about zero risk of loss if someone invests for at least one month.

8. These have given up to 50% to even at times 100% higher returns than the savings

bank account.

9. The total liquid fund in India at AUM is around Rs 4,41,888.24 Cr.

Hybrid mutual fund

Aggressive hybrid mutual funds are a hybrid schemes. These schemes have both equity

instruments and debt instrument in proportions. This fund allocates assets indifferent

instrument and outcome is different from just plain vanilla bond. This instrument has no

option of taking arbitrage opportunities. In arbitrage the securities can be bought at one stock

exchange and can be sold in other.

The autonomy of this mutual fund has larger latitude than balanced mutual funds. This

instrument allocates 20% in debt market and rest in equity securities. The manner in which

stock is selected varies from growth to value. Similarly, the selection of debt securities differs

from being highly sensitive to be low-interest-rate sensitive.

Things investors consider

Investment Horizon

It considers the investors time duration and how long they want to stay invested in the

market. For equity one should have moderate to long term investment period. It helps the

fund to realise its long term inheritance.

Financial Goals

It helps a person’s medium term goals of fulfilling personal desire. And how that person will

invest for long term or moderate term.

Tax on Gains

This fund is treated like a simple equity fund and taxed accordingly. Short term capital

gain(STCG) which is less than 1 year is taxed at 15% rate. Long term capital gain (LTCG)

more than a year is tax free up to Rs 1 Lakh. Over one lakh is 10%.

The Year to date performance of the liquid mutual funds in India.

Liquid mutual funds till date have performed in a steady manner and average return is around

3%.People are showing steady interest in liquid mutual fund because of its high liquidity as it

is a small tenure money market instruments including treasury bills, term deposits, certificate

of deposits, commercial papers.

As it is a safe instrument and its return is quite steady, people tend to park the extra money in

liquid mutual funds.


2850

The Year to date performance of the hybrid mutual funds in India.

Hybrid mutual funds have given many negative yields in last few years.

The aggressive Hybrid mutual funds have not performed well in the market as it is subject to

negative interest rate and equity rate fluctuations.

8

Average performance of liquid mutual fund in last 1 year

In last one year from 2019- 2020 the performance is quite steady

As it is money market instrument the Mutual funds returns were quite steady, ant there is a

rise in the interest rate. The steady return is the prime reason why people invest in the money

market. Return was around 5%.

0%

1%

2%

3%

4%

YTD

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

YTD


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Average performance in last 1 year of all the hybrid mutual fund companies.

Average performances of the aggressive Hybrid mutual funds were quite fluctuating. AUM

performance varied with respect to YTM of the bond and Equity valuation.

AuM liquid debt investment in the market

HDFC liquid fund is the best in the market, the liquid mutual funds have invested heavily in

the money market. It has invested around Rs 4,41,888.24 Cr in the market.

-15%

-10%

-5%

0%

5%

10%

15%

20%

1Y

0%

1%

2%

3%

4%

5%

6%

1Y


2852

AuM Hybrid investment in the market

Hybrid fund investment is Rs1, 14,817.51 quite less than liquid mutual fund.

0.0010,000.0020,000.0030,000.0040,000.0050,000.0060,000.0070,000.0080,000.0090,000.00

AuM (Cr)

0.00

5,000.00

10,000.00

15,000.00

20,000.00

25,000.00

30,000.00

35,000.00

AuM (Cr)


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Growth in return by the liquid mutual fund in the last 1 Year.

Growth in the investment in liquid market was less in last one year.

Growth in return by aggressive hybrid mutual fund in last 1 year.

Investment by the hybrid market was stable last year.

DSP

Liquidity

Fund-

RegularPla…

CanaraRobecoLiquid -RegularPla…

Parag

Parikh

Liquid

Fund-

Gro…

QuantumLiquid

Fund-

Gro

wth…

IIFL

Liquid

Fund-

RegularPlan-…

MotilalOswa

lLiquid

Fund-

Gro…

TataLiquid

Fund-

RegularPlan-…

L&T

Liquid

Fund-

RegularPlan-…

BarodaLiquid

Fund-

PlanA -Gro…

BOI

AXA

Liquid

Fund-

Retail -G…

InvescoIndia

Liquid

Fund-G…

IDFCCashFund-

RegularPlan-G…

Aditya

BirlaSunLife

Liquid

Fun…

NipponIndia

Liquid

Fund-

Gro…

Axis

Liquid

Fund-

Gro

wthLiqui…

ICICIPrudential

Liquid

Fund-G…

PGIMIndia

InstaCashFund-

Gro…

UTI

Liquid

CashPlan-

RegularP…

SundaramMoneyFund-

Regul…

Mirae

Asset

CashManageme…

HDFC

Liquid

Fund-

Gro

wthLiq…

Kotak

Liquid -RegularPlan-

Gro…

HSBCCashFund-

Gro

wthLiquidF…

EsselLiquid

Fund-

RegularPlan-…

FranklinIndia

Liquid

Fund-S…

MahindraManulifeLiquid

Fun…

LICMF

Liquid

Fund-

Gro

wthLiq…

Union

Liquid

Fund-

Gro

wthLiq…

SBI

Liquid

Fund-

Gro

wthLiqui…

Edel

weissLiquid

Fund-

SuperI…

IDBILiquid

Fund-

Gro

wthLiqui…

BNP

ParibasLiquid

Fund-

Grow…

JMLiquid

Fund-

Gro

wthLiquidF…

Indiabulls

Liquid

Fund-

Existin…

Principal

CashManagementF…

TaurusLiquid

Fund-

RegularPla…

Quant

LiquidPlan-

Gro

wthLiq…

YES

Liquid

Fund-

RegularPlan-…

ITILiquid

Fund-

RegularPlan-G…

Growth respect previous year -1-1-1-1-1 0 -1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1 2 -1-1 0 0

-1.5

-1

-0.5

0

0.5

1

1.5

2

2.5

GROWTH RESPECT PREVIOUS YEAR


2854

NAV

NAV of all the Liquid mutual fund in last 1 year

NAV

NAV of the hybrid mutual funds is average.

CanaraRobecoEqu…

BNP

ParibasSubst…

DSP

Equity&Bon…

Mirae

Asset

Hyb…

SBI

Equity

Hybrid…

Shriram Hybrid

E…

SundaramEquity…

JMEquity

HybridF…

IDBIHybrid

Equity…

Kotak

Equity

Hyb…

Principal

HybridE…

L&T

Hybrid

Equity…

FranklinIndiaE…

ICICIPrudentialE…

PGIMIndia

Hybrid…

LICMF

Equity

Hyb…

TataHybrid

Equity…

BOI

AXA

Mid&S…

BarodaHybrid

Equ…

IDFCHybrid

Equity…

UTI

Hybrid

Equity…

Aditya

BirlaSunL…

NipponIndia

Equ…

Quant

AbsoluteF…

MotilalOswa

lEqu…

Mahindra

Hybrid…

MahindraManu…

HSBCEquity

Hybrid…

AxisEquity

Hybrid…

Edel

weissAggress…

InvescoIndiaE…

Indiabulls

Equity…

EsselEquity

Hybrid…

HDFC

Hybrid

Equ…

Growth respect to previous year 1 1 2 1 0 3 2 -9 -5 2 -7 -2 18 2 -3 -0 -2 -5 -3 -3 -2 -1 0 1 0 0 0 0 1 6 9 0 2 11

-120-100

-80-60-40-20

02040

GROWTH RESPECT TO PREVIOUS YEAR

020406080

100120140160180

Essel Equity Hybrid Fund -GrowthAggressive Hybrid

Fund

Nippon India Equity HybridFund - Segregated Portfolio

1 - GrowthAggressive HybridFund

Nippon India Equity HybridFund - Segregated Portfolio

1 - GrowthAggressive HybridFund

NAV

NAV AuM (Cr)


2855

Conclusion

Liquid mutual fund harbours higher concentration of investment in comparison to aggressive

mutual funds. Liquid mutual funds offer a higher rate of return and have less risk appetite

then aggressive mutual fund. Aggressive mutual fund is subject to market risk and negative

yield of the fixed income market.

References

1. http://www.basunivesh.com/2015/10/26/top-10-best-sip-mutual-funds-to-invest-in-

india-in-2016/

2. www.moneycomtrol.com

3. www.valueresearch.com

4. http://www.managementparadise.com/qudoos123/documents/3495/investor039s-

perception-towards-mutual-fundin- delhi/

5. http://www.freepatentsonline.com/article/Asia-Pacific-Business-

Review/198667812.html

6. http://www.jagoinvestor.com/2012/05/mutual-funds-performance-vs-benchmark.html

7. http://mutualfunds.about.com/od/analyzingamutualfund/a/How-To-Analyze-Mutual-

Fund-Performance.htm

8. www.bseindia.com

9. www.nseindia.com

10. News paper: The business line.

11. “Performance an growth of selected liquid fund growth schemes”. An empirial

analysis ISSN 2231-5780, VOL-1, Issues, may 2011,International journal of

multidisciplinary research by kavitha panjwani.

0.00100.00200.00300.00400.00500.00600.00700.00800.00

NAV

Documents

COMPARISON BETWEEN LIQUID MUTUAL FUND AND … · 2021. 8. 3. · Dr. Neha Patvardhan, Professor, Department of International Business (Finance) Symbiosis Institute of International