Mutual fund safety

What is the best option in coin better than the liquid fund for low risk ?

And how liquid fund is safe?

There is no zero risk mutual fund category. But liquid and ultra short term funds have very minimal risk.
one of the risk mgmt technique in debt mutual funds is diversify across multiple AMC’s

As I see in coin some mutual fund are doing business in government securities but it’s return is last 3 year ago is high and this year is very low. What is the biggest reason for that ??

Interest rates. Sometimes interest rates are high, sometimes they are low.

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Dear sir,

This intrest rate depand on what reason or situation?

One reason is inflation, when inflation increases, central banks increase interest rates, and when interest rate increases, mutual funds holding long term bonds will fall more and mutual funds holding short term bonds will fall less. Liquid funds hold bonds of 91 days maturity, so liquid funds fall less.

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Government bonds have sovereign guarantee, so they are effectively free of credit risk. You do have interest rate risk, but I believe we are already near the top of the cycle. You could choose a tenure depending upon the risk you’re willing to take.

If you select a bond with a higher duration, it will be more sensitive to interest rate changes. If interest rates fall, the price appreciation will be more compared to a bond of lower duration. And vice versa.

The yield curve is very flat right now, so if you’re a starter, you could consider investing in a medium-term target maturity Gilt fund.

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Thank you for your kind information.

Thank you