Liquid Mutual Funds are a type of debt fund that invests in short-term fixed-income instruments such as commercial paper, government securities, and treasury bills with a maturity of up to 91 days. A liquid fund's Net Asset Value (NAV) is calculated daily for 365 days, and withdrawals can typically be processed within 24 hours. These funds are known for their low interest-rate risk within the debt funds category.

Here are some benefits of investing in liquid funds:

1. No lock-in period: Withdrawals can be processed within 24 hours on business days.

2. No entry or exit load is applicable if units are held for 7 days or more.

3. Low-interest rate risk due to high liquidity.

4. Tax benefits: Dividends received are tax-free, although taxation applies to capital gains.

5. Diversification: Investing excess cash in liquid funds helps meet emergency expenses and shields against equity investment volatility.

6. Stable NAV: The NAV of liquid funds does not fluctuate as much as other funds.

7. NAV calculation: Unlike other debt funds, the NAV for liquid funds is calculated for all 365 days.

Note:

- For Liquid and Overnight Funds, the purchase cut-off for T-1 days NAV is before 1:30 PM, while same-day NAV is applicable for purchases made after 1:30 PM.

- The purchase cut-off for same-day NAV is before 2:30 PM for all other schemes.

- Settlement Turnaround Time (TAT) for redemption of liquid funds is T+1.