Mutual fund liquidity is the ease of buying or selling fund units without significantly impacting its NAV or market value. (Content courtesy Centre for Investment Education and Learning (CIEL))
ET Online
2/5
Why MFs are more liquid
A mutual fund is deemed more liquid if its investments include easy-to-buy or sell assets such as money market instruments, government bonds, and large-cap stocks.
ET Online
3/5
What impacts liquidity
If the fund has less commonly traded investments, it might impact the fund’s liquidity.
ET Online
4/5
How fund managers ensure liquidity
Fund Managers ensure liquidity by managing cash inflows from new purchases, prepayments, interest, dividends, and maintaining highly liquid investments.
ET Online
5/5
Point to keep in mind
Since open-ended mutual funds offer a feature of any-day redemption, it is important to meet all redemptions without significantly diluting the interests of remaining unit holders.
