Fall in Liquid Fund NAVs


Very recently liquid funds gave negative returns. Liquid funds which are considered highly safe investment instruments losing value came as a bit of a shock for most investors and a lot of them could not understand why this was happening. In this video we have explained the main reasons for the fall in the NAVs of various liquid funds. These reasons included higher selling pressure on the bonds and deposit papers and lack of market makers and bond buyers. This illiquidity has caused the RBI to step in and take appropriate action. We have also tried to address queries like “are liquid funds not safe anymore?” and “What should I do if I am invested in a liquid fund?”


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