Definition: Liquid funds are a type of mutual funds that invest in securities with a residual maturity of up to 91 days. Liquid Funds - Liquid Mutual Fund is a debt fund which invests in fixed-income instruments like commercial paper, government securities, treasury bills, etc. What are liquid funds? Liquid fund is an open-ended debt mutual fund scheme, ideal for short-term investments. Liquid funds are debt funds that lend to companies for a period of up to 91 days. Debt Mutual Funds that predominantly invest in debt securities with short term maturities, that yield fixed returns are known as Liquid Funds. 3 days ago · Liquid funds aim at providing a high degree of liquidity and safety of the capital to investors.