ICICI Pru Liquid Fund for Emergency Fund Creation
ICICI Pru Liquid fund, is a debt mutual fund that can be opted by an investor to create the emergency fund, through SIP or lumpsum mode. An emergency fund is the savings set aside to cover unexpected financial emergencies.
What is a debt mutual fund?
Debt funds are special schemes of mutual funds that invest in fixed income securities like bonds and treasury bills. These investments are less risky compared to equity mutual fund schemes. Net asset values (NAVs) of debt funds are less volatile compared to equity funds. Debt funds too face market and credit risks. Market risk arises when the interest rate in the market fluctuates. Credit risk arises, if the issuer of the instruments fails to repay the interest or principal on due dates.
Why is ICICI Pru Liquid fund a good investment option?
To minimise the associated risks, it is important to choose debt funds with lower credit risk, better portfolio diversification, short-to-medium maturity profiles and inherent high liquidity. Good ranking in terms of these parameters makes ICICI Pru Liquid one of the best performing funds in the liquid fund category. Liquid fund is an open-ended debt mutual fund scheme with focus on short-term investments. They mainly invest in debt and money market securities with a residual maturity of up to 91 days.
How has been the performance of ICICI Pru Liquid fund?
ICICI Pru Liquid fund is good for conservative investors with medium term goals for parking of funds. The fund has been in existence since November 17, 2005 and has delivered a CAGR of 7.75% since inception. The AUM of around Rs. 45,000 Crore is a testimony for the good performance of the fund. Fund managers Mr. Rahul Goswamy and Mr. Rohan Maru have vast experience in the industry with 24 and 11 years of experience respectively.
The average portfolio maturity of ICICI Pru Liquid fund over the past one year has been maintained between 31-60 days. The portfolio diversification was between 123-249 debt instruments over the past three years.
What are the investment options available with ICICI Pru Liquid fund?
ICICI Pru Liquid fund is an open ended fund with both growth and dividend options. Minimum purchase amount is Rs. 100 and in multiples of Rs. 1 thereafter. The Fund charges Nil exit and entry loads. Redemption can be done even for Rs. 1.
Investment horizon of one day and above is available. Investment can be through SIP mode too.
What constitutes the portfolio of ICICI Pru Liquid fund?
The fund has invested in the debt instruments of IDFC first Bank, Reliance Jio Infocom, NTPC Ltd, Tata Tele, Muthoot Finance, Adani ports etc and 6.65% Government of India 2020 instrument.
Emergency Fund – Recurring Deposits and Debt Mutual Funds
Investors please note that mutual fund investments carry various kinds of risks and shall seek advice of their financial planner before investment.
