Best Liquid Mutual Funds for 2026

Liquid funds are a type of debt mutual fund that mainly invests in short-term debt and money market instruments. Most of the securities they hold mature within 91 days, which makes them useful for parking extra money for a short period, whether it’s a few weeks or a couple of months.

Because they offer quick access to your money (as the name suggests), liquid funds are popular with investors who want a safe, short-term place to keep their cash for just a few days or weeks. We have also listed some of the top liquid fund options for 2026 for you to check out.

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Overview of the Top Liquid Funds in India

ABSL Liquid Discipline Advantage Plan

ABSL Liquid Discipline Advantage Plan stands out as one of the top liquid funds, boasting a massive AUM of ₹56,947 crore and a competitive expense ratio of 0.35%. This open-ended scheme focuses on delivering reasonable returns with high safety and liquidity by investing in high-quality debt and money market instruments maturing up to 91 days. It has clocked solid 3-month returns of 1.48% and 1-year returns of 6.87%, making it a reliable pick for short-term parking of surplus cash.

Bank of India Liquid Fund

Bank of India Liquid Fund offers a lean expense ratio of just 0.14% and an AUM of ₹1,513 crore, ideal for investors seeking low-cost liquidity. As an open-ended liquid scheme, it prioritizes capital preservation, lower risk, and quick access through debt and money market instruments. Recent performance shows 1.46% over 3 months and 6.53% over 1 year, perfect for very short-term surplus funds.

Union Liquid Fund

Union Liquid Fund manages ₹7,153 crore in AUM with an ultra-low expense ratio of 0.17%, appealing to cost-conscious short-term investors. This fund invests predominantly in commercial papers, certificates of deposit, treasury bills, and other debt for steady, low-risk income with high liquidity. It delivered 1.45% returns in 3 months and 6.47% over the past year.

Axis Liquid Fund

Axis Liquid Fund holds a strong AUM of ₹38,936 crore and keeps costs down at 0.24% expense ratio. Designed for low-risk, high-liquidity needs, it builds a portfolio of money market and top-quality debt securities to generate reasonable short-term returns. Performance includes 1.44% in 3 months and 6.51% for 1 year, suiting emergency funds or brief cash holds.

Tata Liquid Fund

Tata Liquid Fund features ₹22,366 crore AUM and a 0.31% expense ratio, balancing size with efficiency. The scheme targets returns close to short-term rates via money market tools like treasury bills, commercial papers, and certificates of deposit. It posted 1.44% over 3 months and 6.48% in 1 year, great for parking funds up to a year.

UTI Liquid Cash Plan (now UTI Liquid Fund)

UTI Liquid Cash Plan (now UTI Liquid Fund) oversees ₹29,542 crore AUM at a 0.22% expense ratio, emphasizing stability. This open-ended liquid fund generates steady income with minimal risk and top liquidity from debt and money market instruments up to 91 days maturity. Returns stand at 1.44% for 3 months and 6.48% over 1 year.

Mahindra Manulife Liquid Fund

Mahindra Manulife Liquid Fund has a compact AUM of ₹1,219 crore and 0.26% expense ratio, focusing on short-term reliability. As a low-interest-risk scheme, it allocates to money market and debt instruments up to 91 days for regular income over brief horizons. It achieved 1.44% in 3 months and 6.45% for the year.

Invesco India Liquid Fund

Invesco India Liquid Fund manages ₹16,638 crore AUM with a 0.22% expense ratio, prioritizing safety. The fund invests in money market and debt for short-term income, low risk, and easy liquidity, making it handy for surplus cash needs. Performance: 1.44% over 3 months and 6.47% in 1 year.

Groww Liquid Fund

Groww Liquid Fund is nimble with ₹160 crore AUM and a low 0.20% expense ratio, ideal for beginners. This debt scheme offers high liquidity and low risk through short-term instruments, delivering consistent short-term gains. It returned 1.44% in 3 months and 6.50% over 1 year.

HDFC Liquid Fund

HDFC Liquid Fund leads with the largest AUM at ₹68,211 crore and 0.28% expense ratio for broad accessibility. It provides steady, low-risk returns via a portfolio of debt and money market securities, suited for parking funds briefly. The fund shows 1.44% for 3 months and 6.45% annually.

निष्कर्ष

Liquid funds are a smart option for anyone who wants to keep their money safe while still getting decent flexibility and returns. Thanks to their easy accessibility and tax advantages, they work as a solid alternative to regular savings accounts—and even fixed deposits—when you need to park your money for short periods.