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Aditya Birla Capital LimitedAditya Birla Capital Limited (“ABCL”) is a listed systemically important non-deposit taking Non-Banking Financial Company (NBFC) and the holding company of the financial services businesses. ABCL and its subsidiaries/JVs provides a comprehensive suite of financial solutions across Loans, Investments, Insurance, and Payments to serve the diverse needs of customers across their lifecycles. Powered by over 61,600 employees, the businesses of ABCL have a nationwide reach with over 1,690 branches and more than 200,000 agents/channel partners along with several bank partners.
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What is a Overnight Mutual Fund?
An overnight mutual fund is a type of debt mutual fund which invests a majority of its portfolio in securities maturing within a day. The fund, thus, has a short-term investment horizon.
Advantages of Overnight Mutual Funds
High liquidity
Redemptions can be done instantly and as the underlying securities have a short maturity period, overnight funds are highly liquid
Limited risks
Overnight funds have negligible credit risk and interest rate risk, making them one of the safest debt funds.
Stable Modest Returns
Prospect of consistent, albeit modest, returns for very short holding periods.
Easy Short-Term Parking
A straightforward way to temporarily hold surplus cash, earning a small return on idle balances.
Explore Overnight Mutual Funds
Most Popular
AUM: 23427(Cr)
Risk: Very High
- MIN. INVESTMENT 500
- 5 YRS RETURNS 33.32%
- Invest (Per Month) ₹10000
- Get (30 Yrs) ₹24,850*
*Projections/estimations is backtested using historical data.
Most Popular
- AUM: 23427(Cr)
- Risk: High
- MIN. INVESTMENT 1000
- 5 YRS RETURNS 33.32%
- Invest (Per Month) ₹15000
- Get (30 Yrs) ₹34,850*
*Projections/estimations is backtested using historical data.
Overnight Funds Returns Calculator
REGULAR INVESTMENT
SIP
Invest systematically in regular amounts and build a corpus with a disciplined investing habit.
START SIPONE TIME INVESTMENT
Lump sum
Invest once with the facility of lump sum investing and save at your will. Time the market correctly and earn good returns.
INVEST LUMPSUMTotal Amount Invested
₹ 0
Expected Wealth Gain
₹ 0
Disclaimer: Projections/estimations is backtested using historical data.
Total Amount Invested
₹ 0
Expected Wealth Gain
₹ 0
Disclaimer: Projections/estimations is backtested using historical data.
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Understanding Overnight Mutual Funds
Table of Contents
What are Overnight Mutual Funds?
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Overnight Mutual Funds are a type of debt fund investing in securities with a one-day maturity. They are open-ended debt funds actively managed and suitable for investors looking to park their surplus funds for a short period.
What are the features of Overnight Mutual Funds?
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Negligible credit risk since the instruments mature within a day
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No interest rate risk as a change in interest rates wouldn't affect securities maturing in a day
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Can offer better returns than savings accounts
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You can deposit and withdraw your investment at your convenience
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Invest through SIP or lump sum
Things to keep in mind when investing in Overnight Mutual Funds?
Check the expense ratio and choose a fund which has the lowest expense ratio for better returns
Since the returns are low, compare and select the fund delivering better returns than its competitors
Overnight funds are suitable if you want ready access to funds. If you can stay invested for several weeks or months, choose another fund for better returns.
What are the types of risks that Overnight Mutual Funds face?
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Credit Risk
Risk of default on the debt instrument
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Interest Rate Risk
Risk of rising interest rates, which reduces the value of debt instruments
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Reinvestment Risk
Risk of not getting good returns on reinvestment.
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Inflation risk
Risk of inflation reducing the returns from the debt fund
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Liquidity risk
Risk of not being able to trade in debt instruments
What is the tax implication of Overnight Mutual Funds?
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Returns earned are taxed at your income tax slab rates
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Dividends earned, if any, are taxed at your income tax slab rate.
What are the payout options?
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Dividend option
Earn dividends on your investment at regular intervals
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Growth option
Accumulate the returns over the investment tenure and get a lump sum amount on redemption
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FAQs On Overnight Mutual Funds
Overnight funds are mutual funds
that invest primarily in short-term debt securities with one-day maturity. They are among the safest debt funds
available and might provide higher returns than savings bank accounts.
However, please go through all the factors involved in both options and then make a decision best suited to your personal needs.
The minimum investment amount for overnight funds varies as per the fund house.
Firstly, scrutinise the fund for its returns and performance consistency. Secondly, check the expense ratios of your shortlisted funds. Most importantly, make sure that you are investing in an overnight fund not because of a recent credit mishap or financial issue but towards a sound financial goal.
Since overnight funds do not carry an exit load, redemption is easy. You can directly use the same mobile app you used before to make your investment and place a redemption order within minutes.
No, overnight funds do not need to be monitored and managed for too long, making their expense ratio lower than other funds.
No, overnight funds invest in debt securities with overnight maturity.
Overnight funds are best suited for preserving surplus funds with modest returns and high liquidity.
Low risk, high liquidity, moderate returns, and investment flexibility are some key benefits of overnight funds.
Yes, overnight fund returns can change as per changes in interest rates
a. Investors with a very short investment horizon: Investors with a very short investment horizon, such as those seeking to park funds overnight or for a few days, can benefit from the high liquidity and minimal interest rate risk of overnight funds.
b. Medium to route investments in equity funds: Medium-term investors looking to allocate funds from equity investments can utilise overnight funds as a temporary parking option during market uncertainties or while awaiting better investment opportunities.
There are no specific requirements. You're free to redeem as many units or amounts as you desire.
Yes, overnight mutual fund schemes are ideal for ultra-conservative investors seeking minimal risk exposure and stable returns over a short investment horizon, making them a suitable choice for capital preservation.
Overnight funds offer higher liquidity and potential returns compared to FDs , making them suitable for short-term investments. However, FDs provide higher stability and fixed returns over a longer tenure, appealing to those seeking security and steady growth.
Withdrawal from Overnight Mutual Funds typically occurs on the next business day after the redemption request is placed, ensuring quick access to funds without any lock-in period.
Overnight funds invest in securities with a maturity of one day, offering higher liquidity but potentially lower returns than liquid funds, which invest in debt instruments with maturities up to 91 days, providing slightly higher returns with still high liquidity.
Types of Debt Mutual Funds
Funds Based On Duration
Funds Based On Portfolio Allocation
Other asset class funds
Debt Funds
Invest in debt securities for low risks and stable returns.
Know More
ETF Funds
Invest in funds listed and traded on the stock exchange
Hybrid Funds
Get a mix of equity, debt and other asset classes for a diversified portfolio
Know More
Fund of Funds
Mutual funds that invest in other mutual funds both in India and globally
Index Fund
Passively-managed mutual funds tracking a particular index
Know More