IIFL Liquid Fund NFO

The new fund offer opened on November 1 and will close on November 11

FEATURES:

It is a new open-ended liquid fund from IIFL Mutual Fund (part of the India Infoline group) with features like any typical existing liquid fund investing in the shortest tenure debt paper.

FOR WHOM: Although mutual funds usually market their liquid funds more to institutional and large corporate investors, individual investors too can explore investing in liquid funds than part of their moneys in savings accounts, which lies idle for one to three months.

NFO PERIOD:

The new fund offer opened on November 1 and will close on November 11. The minimum investment size is Rs 5,000.

ASSET ALLOCATION & BENCHMARK: The fund's scheme information document (SID) states it will invest only in money market and debt instruments with residual maturity up to 91 days. The fund's benchmark will be Crisil Liquid Fund Index.

CHARGES:

The annual recurring charges can go as high as 2.75 per cent if you go through a mutual fund agent. If you go through the `direct' plan, 2.45 it could still go as high as per cent.

Investors looking to deploy idle funds in liquid funds have a universe of about 55 funds. There is nothing extra-ordinary in the new liquid fund offering by IIFL Mutual Fund. On performance of comparable existing schemes of IIFL MF , too, one does not see signs of decent returns.

The fund house's earlier two debt schemes were launched in the last six months. A performance check on the older of these two funds, IIFL Dynamic Bond Fund, using Capitaline NAV mutual fund database, reveals a below-average track record. This open-ended income fund, operational since mid-June, was analysed for its three and four-month absolute returns. As of net asset values of November 1, out of 85 open-ended income funds, IIFL Dynamic Bond Fund was ranked 74th in three-month returns and 81st in four-month returns.

The scheme gave a 0.38 per cent three-month return and a -3.61 per cent four-month return. To give a sense where this scheme's returns lay the best and worst performers can be looked at. In three-month period, the best-performing income scheme gave a 3.93 per cent, while the worst-performing delivered a -0.51 per cent return. In four-month period, the top performer notched a 5.44 per cent return, while the one at the very bottom gave a -5.18 per cent return. While three to four months is too short a period to get a hang on a long-term debt instrument such as an income fund, the newness of IIFL MF's schemes leave no choice for an investor looking to gauge the mutual fund's track record.