Liquid Fund — Mutual Fund Term Explained

A debt fund investing in money market instruments with maturity up to 91 days. Very low risk, T+1 redemption, returns better than savings accounts.

Liquid funds invest in short-term money market instruments — treasury bills, commercial paper, certificates of deposit — with maturity up to 91 days. Virtually no interest rate risk and low credit risk.

Ideal for parking emergency funds or short-term cash. Redemption proceeds credited by the next business day.

Related terms

• Money Market Fund — A debt fund investing in money market instruments with maturity up to 1 year. Slightly higher yield than liquid funds.
• Overnight Fund — The safest debt fund — invests only in overnight (1-day maturity) instruments. Virtually no risk. Returns slightly lower than liquid funds.

Browse the full mutual fund glossary, or see this concept in action in the fund screener.