Liquid Funds

Please pardon my ignorance, but I have a very basic question regarding “Liquid” funds.
I am planning to park my lumpsum money in liquid funds and initiate STP to diversified equity funds of the same fund house.
This was actually discussed in this messageboard about one month back. My question is: do I need to park my money in only those funds which have the word “Liquid” in the name? I know this sounds silly, but just wanted to confirm if the term “Liquid” (when used in a fund name) has some special meaning? e.g. consider the following 2 options where I want to STP to Birla Sunlife Frontline Equity.1. Birla SL Dynamic Bond -RP (G) –> STP to –> Frontline Equity
2. Birla SL Liquid Plus – RP (G) –> STP to –> Frontline Equity

Now, the first option seems to be a better option to me as it has given 11% return in last 1 year. So can I go ahead with this?
Or do I have to choose the 2nd option only because the name suggests it’s a “Liquid” fund?

FYI, exit loads are as below:
Birla SL Dynamic Bond (0.20% if the investment is redeemed within 30 days months from the date of allotment.)
Birla SL Liquid Plus (0.25% for redemption /switch out of units within 1 month from the date of allotment)

Again, that means I cannot start STP from Birla SL Liquid Plus before 1 month, correct me if I am wrong.

Dear, Plz. note –

Birla Dynamic bond fund is a bond fund, that’s why its performance in terms of returns is better than liq. + fund. As it is a bond fund, exit load is there.
Birla SL Liq. + fund don’t have any exit load. I personally check from birla web site for the same. In fact no liq. + fund has exit load.

If u opt Dynamic bond fund for higher returns, even in this case Exit load don’t seems much as u ‘ll transfer 1K per week only. So u ‘ll pay exit load for 4 weeks only. So for a weekly STP of 1K, ur total exit load for 4K Rs. ‘ll be 8 Rs. (0.2% of redeemed amount) only.

One plain advise, to avoid entry load on Target Eq. fund (Birla Frontline in this case), invest under direct mode only.

Regarding the use of word, liquid + , is not at all necessary, some AMCs use other words like Cash plus, Cash management

Ashal …

2 Responses to Liquid Funds

  1. vignesh says:

    Hi ashal

    I came to see your blog. I am regularly following you in Let me come to my question:
    “One plain advise, to avoid entry load on Target Eq. fund (Birla Frontline in this case), invest under direct mode only.”

    these lines i cant understand in ur above comments. pls clarify for me.

    I guess this is a old post in which entry loads were there?

    pls make me understand

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