You have to keep track of four basic factors: return consistency, expense ratio, minimum investment allowed and portfolio quality. If the need is stability, a liquid fund with widely fluctuating returns is not desirable. Also, you don't want a fund with high expense ratio to eat into your daily returns. The range in expense ratios for liquid funds is between 5 and 100 basis points per annum, with the average being around 25 basis points. One basis point is one hundredth of a percentage point.
The narrow dispersion of returns in among liquid funds makes it harder for an algorithm to pick one over the other. If a liquid fund has a high return and high expense ratio, one has to question whether return comes at the cost of safety. Ideally, one should look for lower expense ratio, lower risk. Here, size is not the enemy of performance. In fact, a large sized and dominant fund house is often the right home for your liquid funds.
Some liquid funds allow a minimum investment of Rs 500 and others may be Rs 10,000. You need to choose the one that suits you.
Also, there is a difference in picking an ETF versus a regular fund. The former needs you to have a demat account and you need to be mindful about tradability of ETF units for the amounts that you want to buy or sell on the exchange.
SIPs are Best Investments when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich - Best ELSS Funds
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