Invest in Best Overnight Funds in India 2024
Discover the best Overnight Funds to invest in India for 2024. Learn who should invest, key benefits, risks, and find the top performing Overnight Funds in the market.
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What is Overnight Mutual Funds?
Overnight Fund is an open ended fund that invests in debt securities which matures the next day. It means that the securities mature every day and the fund manager uses the returns to buy securities that mature the very next day. As the securities typically last one day, the funds are not exposes to the kind of interest rate risks or capital loss risk like other debt funds.
Who Should Invest in Overnight Mutual Funds?
- High income individual: If you are high income individual who wish to put your surplus cash to put to work, overnight funds can be a good choice.
- Low risk preferring investors: Being a highly liquid instrument, these funds are typically the lowest risk among all investments
- Quick access to funds: People who require quick access to funds typically can invest in these types of funds
Best performing Overnight Mutual Funds
| Fund name | Category | Risk | 6 months return | 1 year returns | Rating | Fund Size in crores |
| SBI Overnight Fund | Overnight Funds | Low | 3.24% | 6.60% | 3 | 16096 |
| ICICI Prudential Overnight | Overnight Funds | Low | 3.28% | 6.73% | NA | 14967 |
| HDFC Overnight | Overnight Funds | Low | 3.25% | 6.67% | NA | 10729 |
| Aditya Birla Sun Life Overnight | Overnight Funds | Low | 3.25% | 6.69% | NA | 7917 |
| Nippon India Overnight Fund | Overnight Funds | Low | 3.27% | 6.72% | NA | 7558 |
Factors to Consider While Investing in Overnight Mutual Funds
- Fund Manager’s Expertise: Pick funds that has a fund manager with a good track record of bringing good returns to their investors
- Credit Rating of the Underlying Securities: Ensure that your investment goes into securities that have good credit ratings
- Fund Performance: Consider the funds past performance including historical returns so that it will give you an idea about how much return you might receive
- Expense Ratio: Expense ratio are operational costs. Choose the one with a reasonable expense ratio so that your returns are not affected
- Liquidity: Ensure the fund is highly liquid, allowing you to redeem without any hassles the next day
Major Benefits of Overnight Mutual Funds
- High Liquidity: Overnight funds have the highest liquidity among all funds allowing you to typically withdraw funds within a day
- Low Risk: These funds invest in safe debt securities making them a best low-risk investment option
- Good returns: Even in a rising interest rate climate, this fund provides modest returns
- Convenience: It is one of the easiest fund to invest with minimal effort and allowing you to redeem your money easily
Risks Involved in Overnight Mutual Funds
- Interest Rate Risk: Though the rising interest rates are a risk that might affect your returns, the impact of interest rate variations are minimal when compared with other fund types
- Credit Risk: If the issuers of debt securities default, the possibility of which is low, it might still impact your returns
- Inflation Risk: The returns might not keep up with the inflation
FAQ on Overnight Mutual Funds
1. How do overnight funds generate returns?
They typically invest in short-term debt instruments like treasury bills, overnight call money, and commercial paper, that provides interests
2. What is the typical return expectation from an overnight fund?
They provide modest returns, often in the range of 3-5% per annum, but it can fluctuate based on interest rate movements
3. Can I withdraw my money from an overnight fund before the next day?
Some funds allow early withdrawals you might need to check the terms and conditions of the same
4. How can I track the performance of my overnight mutual fund investment?
You can track the performance through the fund house’s website or your investment application like Fincover
5. Are overnight mutual funds suitable for long-term goals?
They address short term liquidity needs and are not suitable for long-term goals like retirement planning etc.
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