This, despite yet another tightening measure that the RBI undertook on July 23. But most liquid funds stood their ground the second time. Hence, by July 30, 2 weeks after the first measure by the RBI, most funds had moved in to positive territory. Returns only enhanced post that as a result of the tight short-term liquidity.
The absolute gains varied from 0.1% to 0.7% between July 15 to August 5 2013. The average gains was 0.32%. Half of the about 60 liquid funds managed returns over 0.3% suggesting that most of them comfortably wiped off the losses.
As suggested by us in our article post the July 16 fall, investors can continue to hold liquid funds for contingency purposes.
Do expect some volatility but rest assured that liquid funds will cover any lost ground soon. For those who needed to withdraw the money for near term use but chose to wait for the dust to settle, please know that you have been rewarded for your patience.