Skip to main content

Liquid Vs Ultra Short Term Funds

 
Liquid and Ultra Short-term Funds Comparison

1. What are Ultra Short term funds?

Ultra short-term funds are a category of debt funds that invest in commercial paper, treasury bills, certificate of deposit and corporate paper with average maturity of more than 91 days. Typically , the portfolio invests in a basket of securities that mature in a week to 18 months.

2. How are ultra short-term funds different from liquid funds?

Liquid funds are meant for investors looking to invest for very short time periods -from as low as a day to three months.

They hold a liquid portfolio of debt instruments, and as per regulations, the average maturity of the instruments does not exceed 91 days. Interest accrues on the securities held, and there is no volatility , except in rare circumstances.


Ultra short-term (UST) funds also earn accrual income from the instruments they hold. However, Ultra short-term Funds have longer maturity than liquid funds. They also hold in struments whose prices can fluctuate on a daily basis. Hence, they are slightly volatile when compared to liquid funds over the short term of 1-2 months. The longer average maturity for UST funds means that you need to hold them between 1 month and a year.

3. How can ultra short-term funds be used by investors?

Ultra short-term funds can be held by investors looking to invest in equities, but are unsure of the direction of the market and are a looking for a right opportunity to enter. Vice-versa, investors apprehensive of high equity valuations can book profits there and park the money in ultra short-term funds before they decide what to do next.


They can also be used to park funds needed before you make lump sum payments for buying a large asset such as real estate. Wealth managers advise use of ultra short-term funds for systematic transfer plans (STPs). If you wish to invest a lump sum amount in an equity fund, and do not want to invest at one go, put the money in an ultra short-term fund and give instructions to switch a regular sum every month to your equity fund. Investments in ultra short-term funds earn slightly higher returns than a liquid fund.

4. Is there any exit load in an ultra short-term fund?


Most fund houses do not levy an exit load in such funds. However, at times certain fund houses do levy a small exit load of 0.25 0.5% for a time period of 1 week to 6 months. It is best to take a look at this, before making an investment decision.





Invest Rs 1,50,000 and Save Tax up to Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds. Save Tax Get Rich

For further information contact SaveTaxGetRich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

OR

Call us on 94 8300 8300




 

Popular posts from this blog

Post Office Deposits Interest Rates

Best SIP Funds to Invest Online   SIPs are Best Investments when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich For further information on Top SIP Mutual Funds contact  Save Tax Get Rich on 94 8300 8300 OR You can write to us at Invest [at] SaveTaxGetRich [dot] Com

HDFC Capital Protection Oriented Fund – Series II 36M May 2014 NFO

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300     HDFC Capital Protection Oriented Fund – Series II 36M May 2014 NFO will be open for subscription from 16th May 2014 to 30th May 2014. The key features of the scheme are as mentioned below:   Type of Scheme A Close Ended Capital Protection Oriented Income Scheme Benchmark Crisil MIP Blended Index Fund Manager Mr. Anil Bamboli , Mr. Vinay R Kulkarni & Mr. Rakesh Vyas New Fund Offer (NFO) Period 16 th May 2014 to 30 th May 2014. Minimum Application Amount Rs. 5000 and in multiples of Rs.10 thereafter Plans/ Options Offered Growth and Dividend Payout Facility Liquidity To be listed For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

How Tax Deducted at Source (TDS) works?

    THE tax season is here. And if you are an employee you can't blame your employer for deducting large chunks of money from your salary towards tax deducted at source ( TDS ), which he is legally obliged to do. Your bank will also deduct some percentage from your FD interest of Rs 10,000 or more towards TDS! So what is this TDS all about? How is it computed? Are there any changes this year? Read on... What is TDS? TDS reduces your taxable income and could even provide tax relief! The TDS collections account for 40 percent of the total taxes collected in the country. As the name suggests TDS is the amount of tax that is deducted at source in certain types of income . The TDS thus collected is deposited in the Government treasury within a specified time. How is it computed? Some of the types of income where TDS is applicable include salary, interest, rental fee, interest on securities, insurance commission, dividends from shares and UTI/Mutual Funds, commission and brokerage

How to PPF Account extension after maturity

A PPF account can be retained after maturity without making any further deposits. The balance will continue to earn interest till it is closed. Public provident fund or PPF remains one of the most popular savings options for the long term despite a gradual decline in interest rates over the years. PPF accounts have a maturity period of 15 years and they can be extended. If there is no fund requirement, financial planners say, PPF account holders should extend the account beyond 15 years. In terms of income tax implications, PPF accounts enjoy the benefit of EEE (exempt-exempt-exempt) status . Under Section 80C, contribution up to Rs 1.5 lakh in a financial year qualifies for income tax deduction. The interest earned and maturity proceeds are also tax free. What are your options when a PPF account matures? 1) A PPF account can be closed after the expiry of 15 financial years from the end of the year in which the account was opened. 2) The subscriber can retain his

Indian Railways Seat Availability and Train Fare Enquiry

Enter the PNR for your train booking to find its status. Your 10 Digit PNR : Are you looking for Indian Railways Seat Availability information for trains between any two Indian Railway stations? Well, here is a detailed guide to find out seat availability and train fare information for journey between any two stations by any train on any chosen journey date. The holiday season is around and Indian all around are busy making Indian Railways Reservation .But before making the reservation, they would like to check berth availability information and here is a detailed step by step guide to check seat availability and train fare. How to check Indian Railways seat availability · 1. Go to the Indian Railways Passenger Reservation Enquiry page to check seat availability by clicking here [link] · 2. Enter the first few characters of the Originating Station against Source Station Name. For eg., if the origination station is chennai, enter "Che" against Sou
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now