Investing in a Liquid Fund: A 3-Month Return Analysis

Understanding the potential return from your investment in a liquid fund is crucial for effective financial planning. Today, we'll explore the return on investment (ROI) for a 3-month period if you invest Rs 1 lakh in ICICI Prudential Liquid Fund. This analysis is intended for informational purposes and not as financial advice.

Understanding Liquid Funds

Liquid funds are a type of mutual fund that aims to invest in fixed-income securities and money market instruments to provide investors with the flexibility to earn higher returns compared to traditional savings accounts. These funds are designed to be highly liquid, allowing withdrawals without significant penalties.

Analysis of ICICI Prudential Liquid Fund

Initial Investment and NAV

On 15th January 2019, the Net Asset Value (NAV) of the ICICI Prudential Liquid Fund was Rs 271.37. If you invest Rs 1 lakh at this NAV, you would purchase 368.5 units of the fund. This calculation is based on the formula: Investment / NAV Number of Units.

Current NAV and Returns

The NAV of the same fund as of 14th April 2019 was Rs 276.16. If you hold 368.5 units at the new NAV, the total value of your investment would be Rs 101,779.9. Therefore, the profit generated over this 3-month period is Rs 1,779.8.

Return Calculation

The return on your investment over this quarter is calculated as follows: (Total Value at Current NAV - Initial Investment) / Initial Investment * 100. In this case, the return is approximately 1.78%, providing a glimpse into the potential returns of this fund.

Comparing with Other Funds

Most top-performing liquid funds in the market have historically achieved returns close to 7.5% per year, translating to around 1.87% per quarter. Given the current market scenario, it is reasonable to expect a return between 1.7% and 1.8% over a 3-month period.

Conclusion

While this analysis provides a clear picture of the return on investment for ICICI Prudential Liquid Fund over a 3-month period, it is important to remember that past performance is not indicative of future results. It is also crucial to consider individual financial goals, risk tolerance, and market conditions before making any investment decisions.

Note: The mutual fund chosen for this analysis is for informational purposes only and should not be construed as financial advice or a promotion. Always consult with a financial advisor before making investment decisions.