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Zurich Liquidity Fund – In the hot seat

Jun 1, 2001

The turmoil in the stock markets, triggered first by the TMT sell off, and more recently by the breakout of the ‘scam’, has led to a distinct shift in investment patterns. One investment avenue that has benefited from this is the relatively low risk ‘liquid mutual funds’. Here, we take a look at the performance of the Zurich India Liquidity Fund.

The assets under management of Zurich India Liquidity fund (ZILF) (investment option) have shot up by 76% from Rs 290 m in the month of March 2001 to Rs 510 m in the month of April 2001. Assets under the savings option have grown by 65% from Rs 1,340 m in the month of March 2001 to Rs 2,200 m in the month of April 2001.

  1 week 2 weeks 1 month 3 months Inception
Savings Plan 9.4% 9.3% 9.2% 9.7% 9.2%
Investment Plan 9.3% 9.2% 9.5% 10.4% 9.6%
* Returns are annualised including dividends

ZILF has given an annualized return of over 9% in both its investment plan as well as savings plan over a period of 12 months.

Liquid funds are low risk low returns investments. The risk of losing the money is lowest as the funds are invested in AAA and P1+ rated commercial papers and non-convertible debentures. The fund has about 8% of its assets in cash and current assets in order to meet short term redemptions.

For high net-worth investors or corporates who just want to park their funds for the short term, say for a month or so, ZILF is a good option. The returns it has generated are better than a bank fixed deposit. A bank fixed deposit gives somewhere around 7%-8% annualized. Moreover, your funds in a bank FD are locked for that period. However if he were to invest in a liquid fund like ZILF he gets better short terms returns as shown above and also the investor has an option to exit any time out of the fund, as there is no lock in period.

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