7 Best Money Market Mutual Funds to invest in 2020 in India

Top and Best Money Market Mutual Funds to invest in 2020 in IndiaBest Money Market Mutual Funds for 2020


Money Market Funds would invest in government securities, treasury bills issued by RBI, commercial papers from corporates etc. If you are a moderate risk taker and looking for higher returns compared to bank FDs, you can invest in money market mutual funds. What are Money Market mutual funds and how do they work? In this article we would provide some of the Best Money Market mutual funds to invest in 2020 in India for the short to medium term. We would also discuss whether these are safer investment options or not.

Also Read: Best Debt Funds to invest in 2020

What are Money Market Funds and how do they work?


Money market funds are open ended mutual funds that invest in government securities, treasury bills issued by RBI, commercial papers of corporates etc. that has a maturity period of up to 1 year. These funds typically invest in short term debt instruments. The primary aim of money market funds is to minimize the fluctuation of the NAV of the mutual fund.

How we filtered these Best Money Market mutual funds in India to invest in 2020?


Here are the list of parameters which we considered in short listing the Money Market mutual funds to invest in India.

1) We considered best performing Money Market funds in the last 6 months to 1 year that indicates short term performance.

2) We have short listed funds that performed well during various market cycles in the 1 to 5 years which indicate short to medium term performance.

3) These funds have Assets under Management (AUM) as > Rs 500 Crores.

Best Money Market Mutual Funds to invest in 2020


Here are the list of Money Market mutual funds invest in India for short term to medium term.

#1 – L&T Money Market Fund

#2 – Franklin India Savings Fund

#3 – Aditya Birla Sun Life Money Manager Fund

#4 – Nippon India Money Market Fund

#5 – Kotak Money Market Fund Regular Plan

#6 – HDFC Money Market Fund

#7 – UTI Money Market Fund

Now let us see the reasons why we need to invest in these Money Market mutual funds now in 2020.

#1 – L&T Money Market Fund


What is this Fund Investment Strategy?

The scheme aims to generate regular income through investment in a portfolio comprising substantially of money market instruments.

How is the performance of this Money Market mutual fund?

This fund has outperformed and gave 8.1% annualized returns in the last 5 years and 7.6% annualized returns in the last 3 years. In the short term, it gave 8% returns in the last 1 year and 5.1% returns in the last 6 months.

Why should you invest in this Money Market fund?

This fund has given 7.8% annualized return since inception. This fund has 0.25 Beta which indicates low volatility compared to benchmark. Considering its out-standing performance in the last 3-5 years and low beta, this can be considered as one of the best Money Market mutual fund to invest in 2020.

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#2 – Franklin India Savings Fund – Retail Plan


What is this Fund Investment Strategy?

The mutual fund seeks to provide income and liquidity consistent with the prudent risk from a portfolio comprising of money market instruments.

How is the performance of this Money Market mutual fund?

This fund has outperformed and gave 7.8% annualized returns in the last 5 years and 7.6% annualized returns in the last 3 years. In the short term, it gave 8.2% returns in the last 1 year and 3.4% returns in the last 6 months.

Why should you invest in this Money Market fund?

This fund has given 7.5% annualized return since inception. This fund has 0.6 Beta which indicates low volatility compared to benchmark. Considering its out-standing performance in the last 6 months to 5 years and low beta, this can be considered as one of the top performing money market mutual funds to invest in India.

#3 – Aditya Birla Sun Life Money Manager Fund


What is this Fund Investment Strategy?

The scheme seeks to generate regular income through investment in a portfolio comprising of money market instruments.

How is the performance of this Money Market mutual fund?

This fund has outperformed and gave 7.7% annualized returns in the last 5 years and 7.6% annualized returns in the last 3 years. In the short term, it gave 7.9% returns in the last 1 year and 3.4% returns in the last 6 months.

Why should you invest in this Money Market fund?

This fund has given 8% annualized return since inception. This fund has 1.1 Beta which indicates high volatility compared to benchmark. Considering its out-standing performance in the last 6 months to 5 year period, this can be considered as one of the Top 5 Money Market funds to invest in 2020.

#4 – Nippon India Money Market Fund


What is this Fund Investment Strategy?

The MF seeks to generate optimal returns consistent with moderate levels of risk and liquidity by investing in money market instruments.

How is the performance of this Money Market mutual fund?

This fund has outperformed and gave 7.6% annualized returns in the last 5 years and 7.5% annualized returns in the last 3 years. In the short term, it gave 7.8% returns in the last 1 year and 3.4% returns in the last 6 months.

Why should you invest in this Money Market fund?

This fund has given 7.8% annualized return since inception. This fund has 1.07 Beta which indicates high volatility compared to benchmark. It is one of the Best Money-Market fund to invest in 2020.

#5 – Kotak Money Market Fund


What is this Fund Investment Strategy?

The Scheme seeks to generate returns by investing in money market instruments having maturity upto 1 year.

How is the performance of this Money Market mutual fund?

This fund has outperformed and gave 7.6% annualized returns in the last 5 years and 7.4% annualized returns in the last 3 years. In the short term, it gave 7.7% returns in the last 1 year and 3.3% returns in the last 6 months.

Why should you invest in this Money Market fund?

This fund gave 7.4% annualized return since reception. This fund has 1.02 Beta which indicates volatility is in-line compared to the benchmark. Considering its out-standing performance in the last 6 months to 5 years tenure, this can be considered as one of the top 5 Money Market mutual fund in 2020 to invest in India for the short to medium term.

#6 – HDFC Money Market Fund


What is this Fund Investment Strategy?

The scheme seeks to generate income / capital appreciation by investing in money market instruments.

How is the performance of this Money Market mutual fund?

This fund has outperformed and gave 7.5% annualized returns in the last 5 years and 7.3% annualized returns in the last 3 years. In the short term, it gave 7.8% returns in the last 1 year and 3.3% returns in the last 6 months.

Why should you invest in this Money Market fund?

This fund gave 7.5% annualized return since reception. This fund has 1.16 Beta which indicates higher volatility compared to the benchmark. Considering its consistent performance in the last 6 months to 5 years, this can be considered as one of the top 7 Money Market mutual fund in 2020 to invest in India for the short term to medium term.

#7 – UTI Money Market Fund


What is this Fund Investment Strategy?

The scheme seeks to generate reasonable income with high level of liquidity by investing in a portfolio of money market instruments.

How is the performance of this Money Market mutual fund?

This fund has outperformed and gave 7.6% annualized returns in the last 5 years and 7.5% annualized returns in the last 3 years. In the short term, it gave 7.7% returns in the last 1 year and 3.3% returns in the last 6 months.

Why should you invest in this Money Market fund?

This fund has given 7.87% annualized return since reception. This fund has 0.97 Beta which indicates lower volatility compared to the benchmark. Considering its consistent performance in the last 6 months to 5 years, this can be considered as one of the top 7 best money market mutual fund in 2020 to invest in India.

Performance, Ratings and Expense Ratios of these Money Market Funds


List of Top and Best Money Market Mutual Funds to invest in 2020 in India

List of Top and Best Money Market Mutual Funds to invest in 2020 in India

Some FAQs about Money Market mutual funds


1) What is the best money market mutual fund?

You can refer the above list where we recommended top 7 best money market mutual funds to invest in India. These are picked based on its consistent performance and various risk statistics.

2) What is the difference between liquid fund and money market funds?

Both liquid funds and money market instruments invest in government securities, treasury bills, commercial papers from corporates etc. The basic difference is that liquid funds invest in debt instruments that mature within 90 days period whereas money market funds invest in instruments that matures upto 1 year period.

3) What are the advantages and disadvantages of money market mutual funds?

Here are the advantages of investing in money market funds.

a) It provides quick liquidity.

b) Since it invests in government securities and top rated corporate, commercial papers, it is considered a relatively safer investment option.

c) It provides higher yield compared to traditional FDs.

Here are few key disadvantages of investing in money market funds.

a) There are risks associated with fluctuating interest rates. When interest rates increase, yield drops and vice versa.

b) They invest in corporates commercial papers where there is credit risk.

5) Can you lose money in a money market mutual fund?

Money market funds invest in government securities, corporate, commercial papers, etc., There are interest rates and credit risks in this fund. If you invest for less than 1 year period, the value of investments can drop. Also, if there is change in credit ratings of corporates, the value of investments can reduce.

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6) Who should invest in money market funds?

Money market funds invest in debt instruments that mature within 1 year. Hence, these can provide high returns compared to SB account or bank FDs. If you are low to moderate risk taker, willing to invest for 6 months to 3 year period and expecting 7% to 8% annualized returns, you can invest in these funds. If investment horizon is more than 1 year like 3 years or 4 years, you can try dynamic bond funds (which are relative higher risk compared to money market funds) that can provide higher returns.

7) What is better, FD or money market fund?

Bank FD’s provide fixed returns. Where are money market funds provides fixed returns in the range of 6% to 8%. Both are for low risk takers. If you want to invest for short term of 6 months to medium term of 3 years and looking for liquidity and higher returns, money market funds could be better.

Disclaimer: These Money Market funds do not offer guaranteed returns. Past performance may or may not repeat in future.

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Suresh KP

Best Money Market Mutual Funds to invest in 2020 in India

Suresh KP
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