This question pertains to India.

Have liquid funds ever suspended or limited redemptions? Or, worse, gone bankrupt?

What has been the worst fall in value any investor in a liquid fund has faced? Capital Mind says that it's 0.34%. Was that the worst ever fall in value?


Liquid funds invest in very short-term debt instruments (typically less than 90 days debt) - hence interest rate risk is relatively lower.

Are they safer? Yes they are. Compared to other debt funds and equity funds they are safer.

Are they 100% safe? No. Apart from interest rate risk, liquid funds can also face the risk of default. One recent example is that of Taurus Liquid Fund. They had unhealthy exposure to a low rated debt from a company that went down. As a result, it fell more than 7% in a day. Although I don't know if a liquid fund has ever been suspended.

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