If you are a cautious investor who dislikes taking big risks and likes the comfort of a fixed deposit, liquid mutual funds can be a sensible place for your money. These debt-oriented schemes give you easy access to your cash, relatively low risk, and the potential to earn more than an ordinary savings account. Within this category, Nippon India Liquid Fund and Axis Liquid Fund stand out as the top performers, with both delivering nearly 7% returns over three years.
What exactly is a liquid fund
For large amounts, parking the money in a liquid fund often works out better than simply leaving it in a savings account. Liquid funds are a type of debt mutual fund that put money into instruments such as treasury bills and commercial papers. These are short-term debt instruments considered very safe. They suit people who want to reach their money whenever they need it, while still earning a little more than a regular savings account would offer.
Head to head: returns, cost and size
Lined up on the key parameters, the two funds look like this.
- Category: Both are liquid funds.
- Benchmark: Both track the NIFTY Liquid Index A-I.
- Riskometer: Axis Liquid Fund is Low to Moderate, while Nippon India Liquid Fund is Moderate.
- AUM (Closing): Axis Liquid Fund ₹62,841.16 crore, Nippon India Liquid Fund ₹36,609.54 crore.
- Expense Ratio (Regular Plan): Axis Liquid Fund 0.21%, Nippon India Liquid Fund 0.34%.
- 3-Year Return (Regular): Axis Liquid Fund 7.24%, Nippon India Liquid Fund 7.19%.
- Since Inception Return: Axis Liquid Fund 6.97%, Nippon India Liquid Fund 6.84%.
These figures are based on AMFI data as on June 21, 2026.
Which one wins on returns
On performance, Axis Liquid Fund has edged slightly ahead of Nippon India Liquid Fund. The gap is not large, because both funds invest in similar assets. For an investor, the takeaway is simple: both funds have delivered, and the difference between them is small.
The safety and cost angle
Both funds are built to keep your money safe and accessible when you need it. Of the two, Axis Liquid Fund is considered slightly safer. Both invest in high-quality debt instruments.
On cost, Axis Liquid Fund is the cheaper option, with an expense ratio of 0.21% against Nippon India Liquid Fund's 0.34%. In plain terms, that means you keep more of what you earn.
Where the money goes
Both funds invest in things like money market instruments and debt instruments. Axis Liquid Fund's holdings include the Reserve Bank of India, NABARD, Union Bank of India, HDFC Bank and Bank of Baroda. Nippon India Liquid Fund's investments include the Reserve Bank of India, HDFC Bank, SIDBI, NABARD and Bank of Baroda.
So which should you pick
If you want a fund that is a touch cheaper and larger in size, Axis Liquid Fund may suit you better. Nippon India Liquid Fund is a strong choice too, with a long track record of performing well in the liquid fund category. Ultimately it comes down to your own preference. Both can work well for parking emergency savings or short-term money.
Just remember that Axis Liquid Fund and Nippon India Liquid Fund are meant to keep your money safe and accessible, not to generate big gains over the long term. As per AMFI, the primary focus of short-term debt funds like liquid funds is coupon income. Such funds should also be assessed for how much credit risk they take on in order to earn that higher coupon income.
