Since the time liquid funds were first launched in India, predominantly large and institutional investors have invested in them, said Ritesh Jain, CIO, and Tata Asset Management. Concrete efforts were seldom made to market these funds to retail investors. But now is the time that liquid funds are marketed to retail investors.
The combination of attractive interest rates compared to savings bank account, online banking technology and facilities offered by liquid funds presents a promising opportunity to market liquid funds to small individual investors. Improved online banking facilities like NEFT, direct debit or credit and facilities like sweep have eased the day-to-day operational burden of investing.
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Introduction of direct plans has made it even more attractive for retail investors to invest in liquid funds. While institutional flows lend size and economics of scale to a liquid fund, retail investors can participate with investment amounts suitable to them without paying extra.
The only factor that seems to prevent liquid funds from being marketed to retail investors seems to be the perception that liquid funds are meant solely for corporate. But, it is time we as industry participants change this perception and do our bit to aggressively market liquid funds to retail investors.
