The best part? 'No lock-in period'

Advantage Overseas is an agri-trading company which strives to maximize returns on its cash using fund management tools at its disposal. The company uses mutual fund schemes extensively for short- and medium-term liquidity management and has derived good returns.
Liquid schemes from fund houses have helped our company generate satisfactory returns on our idle cash, both for the short- as well as medium-term. These schemes score over bank fixed deposits given that the FDs require a minimum lock-in of funds for seven days. In contrast, the liquid funds from MFs give returns for even a one-day deposit.
Liquid schemes are essentially designed for corporate investors that offer reasonably good returns for short-term investments. These schemes are excellent short-term investment avenues as they target post-tax returns which are higher than conventional bank deposits.
Such funds are positioned as low-risk, low-volatility investment avenues which aim at offering reasonable return to investors who are looking at parking short-term surpluses. The fund attaches importance to low credit risk, portfolio diversification and stability of returns. These schemes usually invest in debt and money market securities with maturity of up to 60 days.
For us, liquid funds are the best available avenue for parking of short-term funds with no lock-in. By understanding their own business cycles, corporates can benefit and use temporary funds for better tax-adjusted returns.
The writer is MD & CEO, Advantage Overseas