Liquid funds invest in securities which have a maturity period of 3 months. Given the short duration of maturity we can assume liquid funds are relatively safe.
yes of course ,i believe ,
you see Franklin portfolio , they gone through aggressively in the portfolio ,Franklin not invested in SOV they just invested in only one category , all Franklin debt fund took portfolio aggressively , so i skip Franklin
in liquid hdfc and icici , birla are good
You are right… there is no exposure to GOI backed securities.
Source:
Review of Risk Management Framework of Liquid Funds, Investment Norms and Valuation of Money Market and Debt Securities by Mutual Funds
3.4.1 Minimum investments in liquid instruments: In order to deal with sudden unplanned redemptions in liquid schemes, MFAC has recommended investing a minimum % of AUM in ‘liquid instruments’. Cash, Government securities, T-bills and Repo on G-Securities are considered as ‘liquid instruments’. Towards this end, MFAC observed that in a stress scenario, the average net redemption in liquid schemes is approx. 19% and the average investments of Top 5 investors in schemes is approx. 20%.
Recommendation: In view of the above, MFAC has recommended that liquid scheme should invest at least 20% of its net assets in liquid instruments. Cash, Government Securities, T-bills and Repo on G-Securities may be considered as Liquid instruments. In case if the minimum investment in such liquid instrument falls below the above threshold, additional investments by the scheme should first be made towards meeting the shortfall for investments in such liquid
I really wish Zerodha enables providing margin against T-Bills and GOI long term bonds. My capital will be much safer in the hands of the government and can stop worrying which liquid / debt is better.
Hey, can you please check and share the underlying breakup of Quantum Liquid Fund? Coin – Zerodha
Need to know how true is the statement:-
There is a structural problem with credit funds. Open ended credit focussed debt funds in illiquid market like India will inevitably run into issues.
what does that mean ? will the RBI give that money to the fund houses for the investments ?
No free lunch , RBI is keep aside 50 k crore those troubled mutual fund can borrow the money with nominal intrest rate for particular time
Will look into it
Agree. It’s high time Zerodha allows traders to plege Gsecs and GOI Bonds.
If Stock Market’s too are going to go bust then human race is well and truly going to go extinct.
@vishnux, after placing the unpledge and redeem request on same day, how much time did it take for the money to get deposited in your account?
I did on friday , Just got released today…
How are these Funds declaring daily NAVs when they are not traded. They can simply bring down the NAVs and say that we paid to the investors whatever we owned them. Can this be reported to SEBI.
Nothing wrong here. The underlying bonds haven’t defaulted and the interest keeps getting accrued which will be marked in the NAV.
Thanks Bhuvanesh, but how is the NAV coming down, it has come down by about 1% in the past 2 days. Have the bond yields come down by 1% in last 2 days.