Instant credit! Now, redeem your liquid fund holdings in no time

Many investors shy away from investing in liquid or money market mutual funds thinking redemption may need advance planning. They cannot, for instance, place a redemption request on a non-working day or during weekends. Also, after placing a request, they may have to wait for 1-3 days for the money to reach their account. To overcome these hurdles and to make their products as competitive as banks', mutual funds now allow instant redemption. So far, two fund houses -Reliance and DSP BlackRock -offer this facility in two schemes, but others are expected to follow suit. 

Which schemes allow instant redemptions?

Currently, Reliance Money Manager Fund and DSP BlackRock Money Manager Fund allow instant redemptions. Both are ultra shortterm schemes, a category in which investors invest their surplus savings. With this system in place, investors can withdraw a portion of their liquid money any time.

How can an investor do an instant redemption from these funds?

An investor can place a redemption request through the website of the fund house. Reliance also allows investors to place a request through its mobile application.

Are there restrictions on withdrawals?

Investors can redeem up to 95% of the amount in their account, subject to a maximum of Rs 2 lakh per day.The minimum withdrawal amount is as low as Rs 500 in Reliance Money Manager and Rs 100 in DSP BlackRock Money Manager Fund.Once the redemption request is placed, money reaches the bank account instantaneously.

How do you invest in these schemes?

Investment in these schemes can be made through the websites of the fund houses or by submitting a physical application. These schemes do not have any entry or exit load. The minimum investment amount in DSP BlackRock Money Manager is Rs 1,000; for Reliance Money Manager Fund, it is Rs 500.

Why do investors prefer liquid ultra short-term funds over savings bank or current accounts?

Ultra short-term funds returned 8.65% in the past year, while liquid funds gave 7.69%. Compared to this, banks offer zero interest on current accounts and 4% on savings account; some private sector banks offer 6% on savings account.However, returns in mutual funds cannot be guaranteed.