How safe are liquid funds

I have exposure to all liquid funds that’s allowed to pledge in zerodha…with the recent problem in Franklin, how risky is to hold these funds…what are the odds these funds will be closed too and in which situation

@nithin @siva @Bhuvan

Also, a word on overnight funds as well. I know they’re as safe as safe could be, but under what scenario could we see some problem there?
Past week, we saw oil being negative, so I guess nothing is impossible these days.
@nithin @Bhuvan

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Having foregone Senior citizen FD interest @ 7% on ₹20 lakhs parked at zerodha , I was interested to go in to LIQUIDBEES & pledge in zerodha( do mostly intraday trade). But the recent events in funds industry making me think twice.

How do you get FD while its on zerodha ?

Any market linked instrument has a risk - welcome to the markets :slight_smile: Having said that some liquid funds are better than others. I understand the panic post the Franklin incident, you needn’t be worried about everything but it pays to be cautious.

Stick to the biggest liquid funds with the most AUM. Look at the number of holdings in the fund and make sure they are diversified. Some of the bigger Liquid funds hold more than 200+ securities, as assuming that there’s a default which is rare, there’s no concentration risk. And keep monitoring the funds.

Read this to understand the risks

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Thank you , What about Niftybees ? Risk is limited to Nifty Fall right ?

And regarding franklink ultra short I can see it has 83 AUM and I cannot SEE voda idea now… What was its weightage ? Why one Idea fail closed whole funds , Will investors ever get money back ?

Niftybees = Equity

As for the Vodafone weight there are other discussions in the forum, you can look them up.

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“If you have a short-term time frame of 1-2 years, it is best to stay with overnight or liquid funds,” says Jitendra Solanki, a Sebi-registered investment advisors. Overnight funds invest in CBLOs, overnight reverse repos, and other debt or money market securities that mature in one day.

Liquid funds invest in short-term money market instruments. Solanki believes that these schemes carry high quality paper which is liquid and, hence, investors would be better off here

Some financial planners suggest investors, who do not need liquidity but just allocate to debt mutual fund schemes as part of their fixed income portfolios, could opt for the 7.75% GOI bond. “The GOI bond issued by the RBI is one of the safest investments that one can get in today’s environment and earn as high as 7.75%. The government has yet not cut rates here even though small savings are down,” says Vikram Dalal, MD, Synergee Capital.

What if I have gold bees pledged is it safe

Which liquid fund can you suggest to invest which is low low risk and good return…
And also suggest how the HDFC Liquid Fund is ?