Overnight Funds
Invest in overnight mutual funds for diversified equity exposure. Compare top funds, check returns, risks, and start investing online with ease.
Overnight Mutual Fund Schemes
25,553.008 | 4505.84 | 5.22 % | 5.99 % | 5.72 % | Low | |
12,280.449 | 1493.42 | 5.26 % | 6.01 % | 5.74 % | Low | |
11,386.726 | 1498.88 | 5.25 % | 6.02 % | 5.76 % | Low | |
10,854.776 | 1467.23 | 5.28 % | 6.05 % | 5.79 % | Low | |
10,342.467 | 4107.80 | 5.22 % | 5.97 % | 5.71 % | Low | |
8,998.932 | 3793.60 | 5.25 % | 6.02 % | 5.75 % | Low | |
7,934.821 | 1478.74 | 5.27 % | 6.03 % | 5.76 % | Low | |
6,791.488 | 148.89 | 5.27 % | 6.04 % | 5.78 % | Low | |
5,555.642 | 1463.30 | 5.29 % | 6.05 % | 5.77 % | Low | |
4,804.904 | 1450.29 | 5.26 % | 6.02 % | 5.76 % | Low | |
3,194.118 | 1484.53 | 5.26 % | 6.02 % | 5.76 % | Low | |
1,926.77 | 1471.87 | 5.22 % | 6.00 % | 5.73 % | Low to Moderate | |
1,527.388 | 1421.34 | 5.26 % | 6.03 % | 5.77 % | Low | |
1,218.106 | 1436.68 | 5.26 % | 6.02 % | 5.76 % | Low | |
1,213.378 | 1478.10 | 5.25 % | 6.02 % | 5.75 % | Low | |
874.272 | 1446.00 | 5.31 % | 6.02 % | 5.73 % | Low | |
869.962 | 1070.23 | 5.27 % | 0.00 % | 0.00 % | Low | |
791.923 | 1216.47 | 5.34 % | 6.05 % | 0.00 % | Low | |
656.923 | 1458.93 | 5.26 % | 6.02 % | 5.75 % | Low | |
656.889 | 1455.92 | 5.28 % | 6.03 % | 5.76 % | Low | |
623.431 | 1430.53 | 5.21 % | 5.94 % | 5.69 % | Low | |
485.349 | 1400.38 | 5.26 % | 6.02 % | 5.75 % | Low | |
357.695 | 1069.55 | 5.30 % | 0.00 % | 0.00 % | Low to Moderate | |
297.494 | 1187.94 | 5.10 % | 0.00 % | 0.00 % | Low | |
167.53 | 1433.65 | 5.24 % | 5.98 % | 5.70 % | Low | |
98.781 | 10.84 | 5.12 % | 0.00 % | 0.00 % | NA | |
95.805 | 1427.93 | 5.13 % | 5.96 % | 5.72 % | Low | |
88.254 | 1410.12 | 5.48 % | 6.16 % | 5.88 % | Low | |
83.02 | 1403.47 | 5.08 % | 5.91 % | 5.68 % | Low | |
73.862 | 1309.86 | 5.12 % | 5.95 % | 0.00 % | Low | |
72.954 | 1434.32 | 5.24 % | 6.01 % | 5.76 % | Low | |
62.927 | 1427.13 | 5.15 % | 5.94 % | 5.62 % | Low | |
53.704 | 12.65 | 5.03 % | 6.05 % | 0.00 % | Low | |
40.5 | 1279.78 | 5.24 % | 5.96 % | 0.00 % | Low | |
31.794 | 1263.91 | 4.96 % | 5.78 % | 0.00 % | Low | |
12.06 | 1400.70 | 4.98 % | 5.78 % | 5.55 % | Low |
Other Overnight Mutual Funds Category
Banking and PSU Funds
Corporate Bond Funds
Credit Risk Funds
Dynamic Bond Funds
Floater Funds
Gilt Fund With 10 Year Constant Duration
Gilt Funds
Liquid Funds
Long Term Mutual Fund
Low Duration 
Medium Duration FundMedium to Long Duration FundMoney Market FundsShort Term Mutual Funds
Target Maturity Funds
Ultra Short Term FundsOvernight Funds
Overnight funds are designed for money that only needs to be parked for a few days. Sometimes, cash sits idle after shares are sold. At other times, it is simply set aside for an upcoming expense. Rather than leaving it unused, it can be moved into an overnight fund. These debt mutual funds invest in securities that mature within a single business day, which makes them one of the lowest-risk categories in the debt mutual fund space for very short-term parking of money.
What Is An Overnight Fund?
Overnight funds invest in debt securities that mature in just one business day. The Securities and Exchange Board of India (SEBI) mutual fund categorisation allows these funds to hold only instruments scheduled to mature on the next working day.
- Invests exclusively in one-day maturity debt instruments.
- Falls under the debt mutual fund category.
- Designed for parking surplus money for a few days.
- Carries very low interest rate risk due to its one-day maturity profile.
- Typically offers lower return potential than longer-duration debt funds in exchange for lower risk.
How Does An Overnight Fund Work?
An overnight fund collects money from many investors and invests it in overnight money market instruments. These investments mature on the very next business day. When they mature, the money (plus interest) is reinvested in another overnight security. This process takes place every business day.
Think of it as renewing a one-day deposit every single day. The investment runs its full course in just one business day. After that, the money moves straight into another overnight instrument.
- Investors' money is pooled and invested in eligible overnight securities.
- Every business day, the existing securities mature and generate interest income.
- The maturity proceeds are automatically reinvested into fresh overnight instruments.
- The fund's Net Asset Value (NAV) reflects the interest earned through this daily reinvestment process.
- Investors can redeem their units according to the fund's redemption rules. That makes these funds a practical choice for very short-term liquidity needs.
For example, ₹2 lakh is invested in an overnight fund on Monday. The money goes into overnight securities with a one-day maturity. Tuesday arrives, and those securities mature. The proceeds are reinvested into new overnight securities that very day. Every working day follows the same pattern.
Features Of Overnight Fund
Overnight funds are designed for investors who want to park money for a very short period while keeping risk relatively low. Their one-day maturity makes them different from other debt mutual funds.
- Invests only in overnight securities.
- Portfolio maturity remains one business day.
- Very low interest rate risk.
- Open-ended mutual fund category.
- Suitable for short-term parking of surplus cash.
Feature | Details |
|---|---|
Category | Debt Mutual Fund |
Portfolio Maturity | One Business Day |
Interest Rate Risk | Very Low |
Liquidity | High |
Investment Option | SIP and Lump Sum |
Benefits Of Investing In Overnight Funds
High returns are not the purpose of overnight funds. They are designed for money that will be used in the near future. Instead of leaving cash idle, these funds provide a practical place to keep it.
Some of their key benefits include:
- Very low interest rate risk: Interest rate changes have only a limited impact on the fund’s NAV because the investments mature every day.
- High Liquidity: Investors are able to cash out at any point in time when they need cash, subject to the applicable settlement process.
- Good for surplus cash: A practical choice for surplus cash. Money that is not needed now can remain here until it is time to invest or spend it.
- Professionally managed: Experienced fund managers select and manage the overnight securities for the benefit of investors.
Risks Of Overnight Funds
Overnight funds are one of the less risky debt fund categories. But they are mutual funds. So, returns are linked to the market, and they are not guaranteed.
- Returns are not fixed and may vary slightly.
- Changes in overnight market rates can affect returns.
- Redemption proceeds follow the mutual fund settlement cycle.
- Like every mutual fund, they carry a small degree of market risk.
Risk | What It Means |
|---|---|
Market Risk | Returns are not guaranteed. |
Interest Rate Risk | Very low because investments mature every day. |
Liquidity Risk | Redemption follows the applicable settlement timeline. |
Return Risk | Returns may change depending on overnight interest rates. |
Overnight Fund Vs Liquid Fund
At first glance, liquid funds and overnight funds appear similar because both are used for short-term investments. The difference is straightforward. They invest in securities with different maturity periods.
Liquid funds invest in debt instruments with maturities of up to 91 days. Overnight funds, by comparison, hold securities that mature on the next business day. That shorter maturity generally means lower interest rate risk. Liquid funds, however, can offer slightly higher return potential over short holding periods.
Basis | Overnight Fund | Liquid Fund |
|---|---|---|
Investment Maturity | One Business Day | Up to 91 Days |
Interest Rate Risk | Very Low | Low |
NAV Movement | Very Small | Slightly Higher |
Investment Horizon | One Day to Few Days | Few Days to Few Months |
Suitable For | Parking money temporarily | Short-term investments |
Taxation Of Overnight Funds
Liquid funds follow the same tax rules as other debt mutual funds. The applicable tax depends on the date the units were purchased.
A different tax rule applies to units purchased on or after 1 April 2023. Gains are included in taxable income. The tax payable is determined by the applicable income tax slab. Holding the units for longer does not change the outcome.
For units purchased before 1 April 2023, the earlier debt fund tax rules may still apply. That depends on how long the investment has been held.
Purchase Date | Holding Period | Tax Treatment |
|---|---|---|
On or After 1 April 2023 | Any Duration | Taxed according to the applicable income tax slab |
Before 1 April 2023 | More than 36 Months | 20% Tax rate with indexation benefits |
Before 1 April 2023 | 36 Months or Less | Tax applies according to the applicable income tax slab |
Tax regulations may look different over time. Before investing or redeeming units, checking the latest rules is worth doing.
How To Invest In Overnight Funds?
There is little difference from investing in any other mutual fund. The KYC process comes first. The investment can then be made through a mutual fund platform, an AMC website, or an investment app, like Kotak Neo.
There is no single approach. A lump sum investment is one option. A Systematic Investment Plan (SIP) is another. Individual preference determines the choice.
The investing process:
- Start by comparing available overnight fund schemes.
- Check the expense ratio before proceeding.
- Take a close look at the fund portfolio.
- Finalise the amount to invest.
- Ensure the KYC process is complete.
- Use the preferred investment platform to begin.
How To Choose The Best Overnight Fund?
Most overnight funds invest in the same set of overnight securities. Returns can look different for a while, but they rarely tell the complete story on their own. A couple of other factors are worth considering as well.
Expense Ratio
Every fund charges a fee for management. That fee is called the expense ratio. A lower expense ratio leaves more of the returns with the investor. Because overnight funds usually generate limited returns, even a minor cost difference can matter.
Fund Size (AUM)
A larger asset base can be an indication of more investors trusting the scheme. However, it should be seen in conjunction with other factors and not be the only deciding point.
Quality Of The Portfolio
Check whether the fund invests in quality overnight instruments. A strong portfolio helps maintain stability.
Consistency
Be sure that the fund has been consistent in its performance over a number of years and not just the past year.
Top 5 Overnight Funds in India
The best overnight fund varies from investor to investor. While comparing funds, investors generally consider returns, expense ratio, assets under management (AUM) and consistency.
[Dynamic Data]
Factors To Consider Before Investing In Overnight Fund In India
Built for very short holding periods, overnight funds serve a specific purpose. That purpose should match the investment goal before any decision is made.
Points to remember before investing:
- Only consider investing if the money is meant to stay parked for a short period.
- Compare expense ratios across similar schemes.
- Do not choose a fund based only on recent returns.
- Overnight funds are market-linked and do not offer assured returns.
- When choosing a fund, think about liquidity requirements.
Overnight Funds FAQs
Overnight funds are debt mutual funds that invest exclusively in overnight securities. Each security has a maturity of one business day. Once the portfolio matures, the proceeds are reinvested into fresh overnight instruments.
Overnight funds are considered to be one of the lower-risk categories of debt mutual funds as the investments mature on every business day. However, they are market-linked products and the returns are not guaranteed.
These can be good for investors who have idle cash that they want to park for a few days but still want access to. They can also be good for businesses and investors that are waiting to deploy their cash elsewhere.
Not all overnight funds are the same. For filters, you can look at parameters like expense ratio, consistency of returns, AUM and quality of portfolio.
Overnight funds are not meant to generate wealth in the long term. They are generally meant for investment horizons from one day to a few weeks.
For units bought on or after 1 April 2023, capital gains will be taxed as per the investor’s income tax slab irrespective of the holding period of the units. The old debt fund taxation rules may continue to apply to existing investments.
The minimum investment amount is dependent on the scheme of the mutual fund. Many fund houses allow SIP investments with a minimum of a few hundred, but the minimum limit for lump sum investment may be different.
Most overnight funds support SIP as well as lump sum investments. There is no single right approach. The better option is the one that matches an investor's cash flow and financial goals.
The NAV applicable is determined as per the cut-off time as prescribed by SEBI and the mutual fund house. Purchases of overnight fund investments have a 1:30 PM cut-off on a business day, and redemptions have a 3:00 PM cut-off. Funds must be realised in the account of the mutual fund before the applicable cut-off time. Eligible investments are processed in accordance with current NAV rules.