What Makes Overnight Funds Unique?
Unlike other debt funds, Overnight Funds carry minimal interest rate risk and credit risk because the instruments they hold mature within 24 hours. This makes them ideal for investors who want to park money for a day or two without worrying about market volatility. They are widely used by corporates, institutions, and even retail investors for short-term liquidity management.
Connection with Money Market Funds
Overnight Funds fall under the broader umbrella of money market funds, which invest in short-term debt instruments like treasury bills, commercial papers, and certificates of deposit. While money market funds can have maturities ranging from a few days to a year, Overnight Funds stick strictly to one-day maturity, offering unmatched safety and liquidity.
Benefits of Overnight Funds
- High Liquidity: You can redeem your investment the next day without any exit load.
- Low Risk: Since the underlying securities mature daily, credit and interest rate risks are negligible.
- Better than Idle Cash: Overnight Funds often provide slightly higher returns than a savings account, making them a smart alternative for idle cash.
Who Should Invest?
If you have surplus funds lying idle for a day or two—maybe between transactions or while waiting to deploy in other investments—Overnight Funds are a perfect fit. They are not designed for wealth creation but for capital preservation and instant liquidity.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.