Overnight Funds

Overnight mutual funds are the type of Debt Mutual Funds that provide investors with a highly liquid investment option. They invest in very short-term debt instruments, typically maturing in one business day. This translates to low risk and immediate access to your funds, making them ideal for parking short-term savings or emergency funds. While returns are modest, they offer a potential advantage over traditional savings accounts.

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Best Overnight Mutual Funds to Invest Today

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AMC/Fund Houses
ICICI Prudential Asset Management Company LimitedHDFC Asset Management Co LtdSBI Funds Management LtdKotak Mahindra Asset Management Co LtdNippon Life India Asset Management LtdAditya Birla Sun Life AMC LtdAxis Asset Management Company LimitedUTI Asset Management Co LtdDSP Asset Managers Private LimitedMirae Asset Investment Managers (India) Private LimitedTata Asset Management LimitedBandhan Asset Management Company LimitedHSBC Asset Management (India) Private LtdDSP Investment Managers Private LimitedFranklin Templeton Asst Mgmt(IND)Pvt LtdIDFC Asset Management Company LimitedCanara Robeco Asset Management Co. Ltd.Edelweiss Asset Management LimitedInvesco Asset Management (India) Private LtdQuant Money Managers LimitedPPFAS Asset Management Pvt. LtdMirae Asset Mutual FundMotilal Oswal Asset Management Company Limited - Portfolio ManagersSundaram Asset Management Company LtdMirae Asset Global Inv (India) Pvt. LtdBaroda BNP Paribas Asset Management India Pvt. Ltd.JM Financial Asset Management LimitedMahindra Manulife Investment Management Pvt. Ltd.PGIM India Asset Management Private LimitedLIC Mutual Fund Asset Management LimitedDaiwa Asset Mgmt. (India) Pvt. Ltd.Fund PineBridge Mutual FundUnion Asset Management Co. Pvt. Ltd.Baroda Asset Management India LimitedPrincipal Asset Management Private LimitedBajaj Finserv Asset Management LimitedWhiteOak Capital Asset Management Limited360 ONE Asset Management LimitedJPMorgan Asset Management India Pvt. LtdBank of India Investment Managers Private LimitedEdelweiss Mutual FundITI Asset Management LimitedNavi AMC LimitedNJ Asset Management Private LimitedICICI Prudential Asset Mgmt.Company LimitedFranklin Templeton Asset ManagementIDBI Asset Management LimitedQuantum Asset Management Co Pvt. Ltd.Samco Asset Management Pvt LtdHelios Capital Asset Management (India) Private LimitedGroww Asset Management Ltd.Trust Asset Management Private LimitedTaurus Asset Management Company LimitedOld Bridge Asset Management Private LimitedZerodha Asset Management Private LimitedShriram Asset Management Co LtdING Investment Mgnt (India) Private Ltd.Baroda BNP Paribas Mutual Fund
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Who should invest in overnight mutual funds?

  • Risk-averse investors

    Overnight funds offer very low risk due to their short-term investments. This makes them suitable for investors who prioritize capital preservation over high returns.

  • Investors with short-term goals

     If you're saving for a short-term goal like a vacation or down payment, overnight funds can be a good option. You can easily access your money when you need it, while potentially earning a bit more than a traditional savings account.

  • Those with emergency funds

    Overnight funds are a good way to keep your emergency fund readily available while still earning a small return.

Advantages of investing in overnight mutual funds

Here are the key advantages of investing in overnight mutual funds

  • High Liquidity

    This is the biggest perk. You can easily withdraw your money whenever you need it, similar to a savings account. There are typically no exit loads, allowing for quick access to your cash.

  • Low Risk

    Overnight funds invest in very short-term debt instruments, typically maturing in a single day. This minimizes the risk of interest rate fluctuations and defaults, making them one of the safest debt fund options.

  • Modest Returns

    While the returns won't be sky-high, they can potentially outperform traditional savings accounts. This allows you to earn a small bit of extra income on your idle cash.
     

  • Flexibility

    Overnight funds offer great flexibility for your cash management strategy. You can invest any amount you have on hand, even small sums, and easily withdraw it later.

  • Parking Place for Short-Term Savings

    Overnight funds are ideal for parking your money meant for short-term goals like a vacation or down payment. They keep your funds readily available while potentially generating some returns

  • Emergency Fund Management

    They can be a secure way to store your emergency fund. You'll have quick access to the money in case of an emergency, while still earning a bit of interest.

Limitations of Investing in Overnight Funds

While overnight mutual funds offer several advantages, there are also some limitations to consider

  • Low Returns

    Since overnight funds invest in very low-risk securities, their potential returns are also on the lower end compared to other debt funds or equity investments. They might not outpace inflation, meaning the purchasing power of your money could decrease slightly over time.

  • Not Ideal for Long-Term Goals

    Overnight funds are best suited for short-term investment horizons. If you have long-term goals like retirement planning, you might want to consider options with the potential for higher returns, even if they come with some additional risk.

  • Tax Implications

    The returns from overnight funds are taxed as short-term capital gains if held for less than 3 years in India, which can be slightly less tax-efficient compared to long-term capital gains from other debt funds.

  • Management Fees

    Like any other mutual fund, overnight funds also come with expense ratios that cover management fees. While typically low, these fees can eat into your already modest returns.

  • Not a Substitute for a Savings Account

    While overnight funds offer some advantages over traditional savings accounts, they shouldn't be considered a complete replacement. Savings accounts might still be useful for everyday transactions due to features like debit cards or check writing, which aren't typically available with overnight funds.

How to start investing in Overnight Funds with INDmoney?

Now that you have understood what is Overnight mutual fund, you need to know how easily you can start your investment with INDmoney. Just follow these simple steps given below, to start your mutual fund investment journey with us.

  • Step 1

    Download the INDmoney app and create your free investment account by completing your KYC ( Know Your Customer).

  • Step 2

    Once your Free investment account is ready, you can either search for a Overnight mutual fund or go to the mutual fund section and tap on Overnight mutual funds.

  • Step 3

    Choose a Overnight Mutual Fund by looking at aspects like past returns, volatility, downside capture ratio, AUM, Expense ratios and underlying stocks and sectors.

  • Step 4

    You can choose to set up SIP in Overnight mutual funds or even invest as lumpSum. Once you are on the individual Overnight mutual fund page click from the bottom “One-time” for lump sum investment or “SIP” for systematic investment plan. 

  • Step 5

    Choose the amount that you want to invest as SIP or LumpSum.

  • Step 6

    Set up payments. If you choose to set up SIP in Overnight mutual funds,  you can do a free automatic pay set up via bank mandate or UPI. If you choose to invest in lumpsum (one-time) then you can pay via UPI, netbanking, NEFT or RTGS.


     

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